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What changed in Leslie's, Inc.'s 10-K — 2024 vs 2025

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Paragraph-level year-over-year comparison of Leslie's, Inc.'s 2024 and 2025 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2025 report.

+366 added−325 removedSource: 10-K (2025-12-18) vs 10-K (2024-11-27)

Top changes in Leslie's, Inc.'s 2025 10-K

366 paragraphs added · 325 removed · 252 edited across 9 sections

Item 1. Business

Business — how the company describes what it does

62 edited+31 added−29 removed33 unchanged
Biggest changeIn 2023, we introduced this same proprietary, commercial grade technology for consumers that can be done in the comfort and convenience of their own home with AccuBlue Home ® . We also employ the industry’s largest network of in-field technicians who perform on-site evaluations, installation, and repair services for residential consumers and professional pool operators.
Biggest changeWe also employ the industry’s largest network of in-field technicians who perform on-site evaluations, installation, and repair services for residential consumers and professional pool operators. Highly experienced and visionary leadership team that combines deep industry expertise and advanced direct-to-consumer capabilities. Our strategic vision and culture are driven by our executive leadership team.
Using the new, industry-leading AccuBlue Home ® connected device combined with the Leslie’s mobile app, program members can utilize commercial grade water testing in the convenience of their home and can test all critical aspects of their water chemistry with ease, generating a custom treatment plan tailored to the specifications of their pool or spa.
Using the new, industry-leading AccuBlue Home ® connected device combined with the Leslie’s mobile app, program members can utilize commercial grade water testing in the convenience of their own home and can test all critical aspects of their water chemistry with ease, generating a custom treatment plan tailored to the specifications of their pool or spa.
We plan to continue to market our loyalty program in-store and online to convert more of our consumers to loyalty members through our loyalty program, Pool Perks ® , in order to offer more value-added features to further drive member enrollment and engagement.
We plan to continue to market our loyalty program in-store and online to convert more of our consumers to loyalty members through our revamped loyalty program, Pool Perks ® , in order to offer more value-added features to further drive member enrollment and engagement.
Leslie’s ® , AccuBlue ® , AccuBlue Home ® , Pool Perks ® , and other trademarks, trade names or service marks of Leslie’s, Inc. appearing in this Annual Report on Form 10-K are the property of Leslie’s, Inc.
Leslie’s ® , AccuBlue ® , AccuBlue Home ® , In The Swim ® , Pool Perks ® , and other trademarks, trade names or service marks of Leslie’s, Inc. appearing in this Annual Report on Form 10-K are the property of Leslie’s, Inc.
A significant portion of our total mix is comprised of products that we manufacture or package through vertical integration, which offers economies of scale that has resulted in higher quality products and a structurally advantaged margin profile. We also operate a vertically integrated distribution and delivery model.
A significant portion of our total mix is comprised of products that we manufacture or package through vertical integration, which offers economies of scale that have resulted in higher quality products and a structurally advantaged margin profile. We also operate a vertically integrated distribution and delivery model.
This includes original equipment manufacturers, regional and local retailers, home improvement retailers, mass-market and club retailers, and specialty e-commerce operators. Key competitive groups include: • Regional and Local Independent Retailers. Estimated to include more than 8,000 smaller, local independent competitors, which offer the convenience of proximity.
This includes original equipment manufacturers, regional and local retailers, home improvement retailers, mass-market and club retailers, and specialty e-commerce operators. Key competitive groups include: • Regional and Local Independent Retailers. Estimated to include more than 10,000 smaller, local independent competitors, which offer the convenience of proximity.
Including the approximately $1.7 billion market for new spas, residential spa represents a total addressable market of approximately $2.6 billion. • Professional Pool . The professional pool market consists of pool service professionals and professional pool operators. Pool service professionals specialize in maintenance and equipment repair for DIFM homeowners, businesses, and government entities.
Including the approximately $1.6 billion market for new spas, residential spa represents a total addressable market of approximately $2.5 billion. • Professional Pool . The professional pool market consists of pool service professionals and professional pool operators. Pool service professionals specialize in maintenance and equipment repair for DIFM homeowners, businesses, and government entities.
In addition, more than 55% of our total sales and 80% of our chemical sales are derived from proprietary brands and custom-formulated products, which allows us to create an entrenched consumer relationship, optimize our supply chain, and capture attractive margins.
In addition, more than 55% of our total sales and 82% of our chemical sales are derived from proprietary brands and custom-formulated products, which allows us to create an entrenched consumer relationship, optimize our supply chain, and capture attractive margins.
Since our inception in 1963, we have offered a portfolio of owned and exclusive brands. We continue to expand our selection of exclusive offerings through innovation and product development. Our exclusive brands and products account for more than 55% of total sales and 80% of chemical sales.
Since our inception in 1963, we have offered a portfolio of owned and exclusive brands. We continue to expand our selection of exclusive offerings through innovation and product development. Our exclusive brands and products account for more than 55% of total sales and 82% of chemical sales.
Through our best-in-class proprietary water testing and backed by our team of highly trained pool and spa experts, we offer sophisticated product recommendations and other expert advice, which cultivates long-standing relationships with our consumers and 3 Table of Contents drives our leading loyalty programs, including Pool Perks ® , our retail loyalty program, as well as our PRO Partner loyalty program for service professionals.
Through our best-in-class proprietary water testing and backed by our team of highly trained pool and spa experts, we offer sophisticated product recommendations and other expert advice, which cultivates long-standing relationships with our consumers and drives our leading loyalty programs, including Pool Perks ® , our retail loyalty program, as well as our PRO Partner loyalty program for service professionals.
Professional pool operators manage approximately 300,000 pools across hotels, motels, apartment complexes, and water parks. This market represents a total aftermarket sales opportunity of approximately $4.4 billion. Our Product and Service Offering We offer a comprehensive assortment of more than 30,000 products across chemicals, equipment and parts, cleaning and maintenance equipment, and safety, recreational, and fitness related products.
Professional pool operators manage approximately 300,000 pools across hotels, motels, apartment complexes, and water parks. This market represents a total aftermarket sales opportunity of approximately $4.9 billion. Our Product and Service Offering We offer a comprehensive assortment of more than 25,000 products across chemicals, equipment and parts, cleaning and maintenance equipment, and safety, recreational, and fitness related products.
Our Marketing Strategy We believe there is significant potential to drive increased share of wallet among our existing consumers through strategic initiatives, such as our loyalty membership program and dynamic promotions. Due to the highly recurring, replenishment driven nature of our product mix and long-term consumer relationships, we believe that our investments in consumer acquisition marketing generate highly attractive returns.
Our Marketing Strategy We believe there is potential to drive increased share of wallet among our existing consumers through strategic initiatives, such as our loyalty membership program and dynamic promotions. Due to the replenishment driven nature of our product mix and long-term consumer relationships, we believe that our investments in consumer acquisition marketing generate attractive returns.
We define “direct relationships” as the number of unique customers for whom we have a mailing address, a phone number, or an email address, and many of which are loyalty members of Leslie’s. Consumer-centric connected ecosystem for all pool and spa owners and the professionals who serve them using proprietary, leading brands across all channels.
We define “direct relationships” as the number of unique customers for whom we have a mailing address, a phone number, or an email address, and many of which are Pool Perks ® members. Consumer-centric connected ecosystem for all pool and spa owners and the professionals who serve them using proprietary, leading brands across all channels.
Through these strategies, we plan to increase brand awareness and continue profitably acquiring new consumers. 8 Table of Contents Our Competition The United States aftermarket pool and spa care industry is fragmented and competitive. We compete against a wide range of manufacturers, retailers, distributors, and service providers in the residential and professional pool and spa care market.
Through these strategies, we plan to increase brand awareness and continue profitably acquiring new consumers. Our Competition The United States aftermarket pool and spa care industry is fragmented and competitive. We compete against a wide range of manufacturers, retailers, distributors, and service providers in the residential and professional pool and spa care market.
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.
Unreasonably 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 time around pool openings and closings, and therefore, our total sales and timing of our sales. We generally open new locations before our peak selling season begins and close locations after our peak selling season ends.
In addition, unseasonably early or late warming trends can increase or decrease the length of the pool season and impact time around pool openings and closings, and therefore, our total sales and timing of our sales. 7 Table of Contents We generally open new locations before our peak selling season begins and close locations after our peak selling season ends.
In addition to operating two manufacturing facilities, we operate a national network of company-operated distribution centers in addition to utilizing third-party distribution centers. Our company-operated distribution centers and our third-party logistics partners have the capacity to carry a broad breadth of our products in significant quantities and are capable of replenishing inventory throughout our physical network.
In addition to operating two manufacturing facilities, we operate a national network of company-operated distribution centers in addition to utilizing third-party distribution centers. Our 8 Table of Contents company-operated distribution centers and our third-party logistics partners have the capacity to carry a broad breadth of our products in significant quantities and are capable of replenishing inventory throughout our physical network.
Accordingly, in fiscal 2023 we completed the commercial launch of our AccuBlue Home ® program, which we continue to expand in fiscal 2024, a subscription-based offering that enables pool and spa owners to confidently test and treat their pools and spas without ever having to leave their backyard.
Accordingly, in fiscal 2023 we completed the commercial launch of our AccuBlue Home ® program, a subscription-based offering that enables pool and spa owners to confidently test and treat their pools and spas without ever having to leave their backyard.
Consumers choose our exclusive, proprietary brands and custom-formulated products for their efficacy and value, a combination that we believe cannot be found elsewhere. We pair our comprehensive product assortment with differentiated in-store and on-site service offerings.
Consumers choose our exclusive, proprietary brands and custom-formulated products for their efficacy and value, a combination that we believe cannot be found elsewhere. 4 Table of Contents We pair our comprehensive product assortment with differentiated in-store and on-site service offerings.
We typically experience a build-up of inventory and accounts payable during the first and second fiscal quarters in anticipation of the peak swimming pool supply selling season. We negotiate extended payment terms with certain of our primary suppliers as we receive merchandise in December through March, and we pay for merchandise in April through July.
We typically experience a build-up of inventory and accounts payable during the first and second fiscal quarters in anticipation of the peak swimming pool supply selling season. We negotiate extended payment terms with certain of our primary suppliers as we receive merchandise in December through March in advance of the swimming pool supply selling season.
We have a long track record of investing in our business throughout the year, including in operating expenses, working capital, and capital expenditures related to new locations and other growth initiatives.
Despite the seasonal nature of our business, we have a long track record of investing in our business throughout the year, including in operating expenses, working capital, and capital expenditures related to new products, locations, and other growth initiatives.
While these investments drive performance during the 6 Table of Contents primary selling season in our third and fourth fiscal quarters, they have a negative impact on our earnings and cash flow during our first and second quarters.
While these investments drive performance during the primary selling season in our third and fourth fiscal quarters, they have a negative impact on our earnings and cash flow during our first and second quarters.
Historically, approximately 80% of our assortment has been comprised of essential and non-discretionary products that are needed by residential and professional consumers to care for pools and spas. The vast majority of our assortment features non-discretionary products that are shelf-stable and generally not prone to either obsolescence or shrinkage, which could occur from changing technology or consumer buying habits.
Historically, approximately 85% of our assortment has been comprised of essential and non-discretionary products that are needed by residential customers and pool professionals to care for pools and spas. The vast majority of our assortment features non-discretionary products that are shelf-stable and generally not prone to either obsolescence or shrinkage, which could occur from changing technology or consumer buying habits.
We plan to pursue our acquisition of these potential new or reactivated consumers and, at the same time, manage consumer acquisition cost by shifting our marketing mix toward more efficient digital and social channels with increasing focus on advanced analytics and return-on-investment focused marketing spend. • Capture outsized share of new pool and spa consumers.
We plan to pursue our acquisition of these potential new or reactivated consumers and, at the same time, manage consumer acquisition costs by shifting our marketing mix toward more efficient digital and social channels with increasing focus on advanced analytics and return-on-investment focused marketing spend.
We offer complimentary, commercial-grade in-store water testing and analysis via our proprietary AccuBlue ® system, which increases consumer engagement, conversion, basket size, and loyalty, resulting in higher lifetime value.
We offer complimentary, commercial-grade in-store water testing and analysis via our proprietary AccuBlue ® system, leading to increased consumer engagement, conversion, basket size, and loyalty, resulting in higher lifetime value.
We source a variety of raw materials and chemicals directly from a diversified supplier base; and maintain strong relationships with these suppliers. As of September 28, 2024, we had one supplier that represented more than 10% of our annual purchases.
We source a variety of raw materials and chemicals directly from a diversified supplier base; and maintain strong relationships with these suppliers. As of October 4, 2025, we had one supplier that represented more than 10% of our annual purchases.
In addition, due to the seasonality of the aftermarket pool and spa care industry, several competitors only stock related products during the summer months, and their product assortment tends to be limited to basic offerings. Human Capital Resources As of September 28, 2024, we employed approximately 3,850 employees.
In addition, due to the seasonality of the aftermarket pool and spa care industry, several competitors only stock related products during the summer months, and their product assortment tends to be limited to basic offerings. Human Capital Resources As of October 4, 2025, we employed approximately 3,790 employees.
Our dedicated team of associates, pool and spa care experts, and experienced service technicians are passionate about empowering our consumers with the knowledge, products, and solutions necessary to confidently maintain and enjoy their pools and spas.
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.
Our water treatment expertise is powered by data and intelligence accumulated from the millions of water tests we have performed over the years, positioning us as the most trusted water treatment service provider in the industry. We have a legacy of leadership and disruptive innovation.
Our water treatment expertise is powered by data and intelligence accumulated from the millions of water tests we have performed over the years, positioning us as the most trusted water treatment service provider in the recreational pool and spa industry.
Our Growth Strategies We believe we are well positioned to drive sustainable growth and profitability over the long-term by executing on the following strategies: Grow our consumer file.
Our Growth Strategies We believe we are well positioned to drive sustainable growth and profitability over the long term by executing on the following strategies: Drive traffic & grow engaged customer base.
Across our physical network, we employ a team of more than 3,000 associates, including pool and spa care experts and service technicians, who act as solution providers to all of our consumers, including both do-it-yourself (“DIY”) and do-it-for-me (“DIFM”) pool owners as well as pool professionals.
Across our physical network, we employ a team of more than 3,700 associates, including pool and spa care experts and service technicians, who act as solution providers to both “do-it-yourself” (“DIY”) and “do-it-for-me” (“DIFM”) pool owners as well as pool professionals.
We have built the most extensive and geographically diverse pool and spa care network in the United States. Our locations are strategically located in densely populated areas mainly throughout the Sunbelt, including California, Arizona, Texas, and Florida.
We have built the most extensive and geographically diverse pool and spa care network in the United States. Our locations are strategically located in densely populated areas mainly throughout the Sunbelt, including California, Arizona, Texas, and Florida, and have a full omni-channel capability to ship to each state within the United States.
The residential pool market consists of approximately 8.8 million pools representing a total aftermarket sales opportunity of approximately $8.4 billion. Within this market, the DIY aftermarket spend represents approximately 70% of total spend while DIFM services represent approximately 30% of total spend.
The residential pool market consists of approximately 9.0 million pools representing a total aftermarket sales opportunity of approximately $7.0 billion. Within this market, the DIY aftermarket spend represents approximately 65% of total spend while DIFM services represent approximately 35% of total spend.
We pioneered the complimentary in-store water test and resulting proprietary pool or spa water prescription, which has driven consumer traffic and loyalty, and has created a “pharmacist-like” relationship with our consumers. We have developed and introduced significant upgrades to our water testing capabilities with the launch of our AccuBlue ® platform.
We pioneered the complimentary in-store water test and resulting proprietary water prescription, which has driven consumer traffic and loyalty, and has created a pharmacy-like consultative relationship with our consumers. We further made significant upgrades to our water testing capabilities with the launch of our AccuBlue ® platform.
The marketplace retailers sell a wide range of pool supplies under a number of brands that are available for sale year-round, however they do not offer services or pool and spa care expertise; and • Wholesale Distributors .
The marketplace retailers sell a wide range of pool supplies under a number of brands that are available for sale year-round, however they do not offer services or pool and spa care expertise; and • Wholesale Distributors . Includes large wholesalers, such as Heritage Pool Supply Group, owned by Home Depot, and Pool Corporation.
This drives an annuity-like stream of demand for the chemicals and products necessary to properly maintain a pool or spa.
This drives an annuity-like stream of demand for the chemicals and products necessary to properly maintain a pool or spa, and Leslie’s is at the forefront of providing innovative products and solutions for this recurring, necessary share of wallet.
Our vertically integrated supply chain enables us to produce and package products at our company-operated packaging facilities and third-party contract packaging facilities.
Our Vertically Integrated Model We operate a vertically integrated supply chain, packaging, and distribution model, which represents a significant competitive advantage. Our vertically integrated supply chain enables us to produce and package products at our company-operated packaging facilities and third-party contract packaging facilities.
Note: None of our employees are covered by collective bargaining agreements. 9 Table of Contents Trademarks and Other Intellectual Property We employ various trademarks, trade names and service marks, including Leslie’s ® , AccuBlue ® , AccuBlue Home ® , Pool Perks ® , and our logo, in our product packaging and advertising our products.
Trademarks and Other Intellectual Property We employ various trademarks, trade names and service marks, including Leslie’s ® , AccuBlue ® , AccuBlue Home ® , Pool Perks ® , and our logo, in our product packaging and advertising our products.
Comprehensive assortment of proprietary brands with recurring, essential, superior product formulations, and trusted, solution-based services for all consumers. We offer a comprehensive product assortment, consisting of more than 30,000 products across chemicals, equipment and parts, cleaning and maintenance equipment, and safety, recreational, and fitness-related categories. More than 80% of our product sales are non-discretionary and recurring in nature.
We offer a comprehensive product range, consisting of more than 25,000 products across chemicals, equipment and parts, cleaning and maintenance equipment, safety, recreational, and fitness-related categories. More than 80% of our product sales are non-discretionary and recurring in nature.
The AccuBlue ® testing device screens for 10 distinct water quality criteria. Our in-store experts leverage our proprietary AccuBlue ® water diagnostics software engine to offer our consumers a customized prescription and treatment plan using our comprehensive range of exclusive products, walking them through product use sequencing step-by-step.
Our in-store experts leverage our proprietary AccuBlue ® water diagnostics software engine to offer our consumers a customized prescription and treatment plan using our comprehensive range of exclusive products, walking them step-by-step through the product use sequence. These detailed and sophisticated treatment algorithms are supported by our differentiated, decades-long water treatment expertise.
We offer an extensive assortment of professional-grade products, the majority of which are exclusive to Leslie’s, as well as certified installation and repair services, all of which are essential to the ongoing maintenance of pools and spas.
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.
While some of our competitors also market and sell online, there are various challenges to serving consumers in the aftermarket pool and spa care industry via e-commerce.
We experience greater brick-and-mortar competition in the states with the largest installed pool bases, including California, Texas, Florida, and Arizona. While some of our competitors also market and sell online, there are various challenges to serving consumers in the aftermarket pool and spa care industry via e-commerce.
These differentiated capabilities allow us to meet the needs of any pool and spa owner, whether they care for their pool or spa themselves, or rely on a professional, whenever, wherever, and however they choose to engage with us.
These differentiated capabilities allow us to meet the needs of any pool and spa owner, whether they care for their pool or spa themselves or rely on a professional, whenever, wherever, and however they choose to engage with us. 3 Table of Contents Our Competitive Strengths We believe that the following competitive strengths have been key drivers of our success to date, and strategically position us for continued success.
For over 60 years, we have been dedicated to addressing our consumers’ pool needs so that they can spend less time maintaining and more time enjoying their pools.
We are the direct-to-consumer market leader in the aftermarket pool and spa care industry, with close proximity to U.S. pool and spa installations. For over 60 years, we have been dedicated to addressing our consumers’ pool needs so that they can spend less time maintaining and more time enjoying their pools.
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 every pool and spas in the continental United States.
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. We operate primarily in the pool and spa aftermarket industry, a fundamentally attractive category in retail, given its scale, historical predictability, and growth outlook.
We plan to do this by executing on the following strategies: • Increase loyalty membership penetration and introduce program upgrades.
We believe we have a significant opportunity to increase spend from existing consumers and drive higher lifetime value. We plan to do this by executing on the following strategies: • Increase loyalty membership penetration and introduce program upgrades.
As the world has become more digitally focused, we have focused on architecting an industry-leading integrated digital platform of proprietary e-commerce websites designed to serve our residential and professional consumers. Our proprietary e-commerce websites serve digital consumers through curated pricing and targeted merchandising strategies.
As digital transactions have become many customers’ default preference, we have focused on architecting an industry-leading integrated digital platform of proprietary e-commerce websites via our Leslie’s and In The Swim ® brands and the Leslie’s iOS and Android apps. Our proprietary e-commerce websites serve digital consumers through curated pricing and targeted merchandising strategies.
Our research suggests that small and mid-size pool professionals value convenience and referrals, both of which we are uniquely positioned to offer given our over 1,000 locations and the industry’s largest consumer file. We plan to expand our physical network of PRO locations, which specifically cater to pool professionals, by selectively opening new locations and selectively remodeling existing residential locations.
Our research suggests that small and mid-size pool professionals value convenience and referrals, both of which we are uniquely positioned to offer given our over 1,000 locations and the industry’s largest consumer file. We continue to assemble an affiliated network of qualified pool professionals through our PRO Partner program, further expanding the Leslie’s name in the professional channel.
Our well-balanced executive leadership team is comprised of leaders with experience in the pool and spa care industry as well as recently hired executives who bring new expertise and capabilities to Leslie’s from outside industries. Our leadership team is uniquely capable of executing upon our strategic vision and successfully continuing to create long-term shareholder value.
Our well-balanced leadership team is comprised of leaders with experience in the pool and spa care industry as well as recent hires who bring new perspectives and capabilities to Leslie’s from a variety of sectors. Our leadership team is firmly committed to executing our strategic vision and, driving increased traffic and conversion; and focused on creating long-term shareholder value.
In addition to our owned e-commerce websites, we also offer our products through online marketplaces such as Amazon, eBay, and Walmart. As a result of our strategic investments in digital, we are uniquely positioned to serve our consumers with cross-channel capabilities and capture incremental online demand from new consumers while growing the total profitability of the network.
As a result of our strategic investments in digital, we are uniquely positioned to serve our consumers with cross-channel capabilities and capture incremental online demand from new consumers while growing the total profitability of the network. Comprehensive assortment of proprietary brands with recurring, essential, superior product formulations, and trusted, solution-based services for all consumers.
Our assortment includes chemicals, equipment and parts, cleaning and maintenance equipment, and safety, recreational, and fitness-related products. We also offer important essential services, such as equipment installation and repair for residential consumers and professional pool operators.
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.
The remainder of the industry is highly fragmented across both offline and online providers. Direct relationships with pool and spa owners and professionals, driving strong Company loyalty programs. We are the largest national pool and spa care brand with a direct relationship with pool and spa owners and the professionals who serve them.
The remainder of the industry is highly fragmented across both offline and online providers, including mass merchant stores with a much narrower assortment of pool and spa care solutions, and local independent operators. Direct relationships with pool and spa owners and professional service providers, driving strong Company loyalty programs.
These detailed and sophisticated treatment algorithms are supported by our differentiated water treatment expertise built over decades. Historically, we have found that consumers who test their water with us regularly spend more with us per year than those who do not, underscoring the importance of this acquisition and retention vehicle.
Historically, we have found that consumers who test their water with us regularly spend more with us per year than those who do not, underscoring the importance of this acquisition and retention vehicle. In 2023, we pioneered this same proprietary, commercial grade technology for consumers in the comfort of their own backyards, with AccuBlue Home ® .
The comprehensive nature of our product and service offering eliminates the need for consumers to leave the Leslie’s ecosystem. Leslie’s loyalty program drives exceptional retention with a higher per transaction spend versus non-loyalty members.
The comprehensive nature of our product and service offering enables our customers to reap expanded benefits by staying within the Leslie’s ecosystem. Pool Perks ® , revamped earlier this year for more rewarding engagement by embracing three different loyalty tiers, specifically drives exceptional retention with a higher per transaction spend versus non-loyalty members.
Includes large wholesalers, such as Heritage Pool Supply Group, owned by Home Depot, and Pool Corporation This group generally does not directly serve the end-consumer, but rather serves as an intermediary that supplies product to retailers as well as the professional channel.
This group generally does not directly serve the end-consumer, but rather serves as an intermediary that supplies product to retailers as well as the professional channel. Our competitors offer pool care products and services of varied quality and across a wide range of retail price points.
Our Company We are the largest and most trusted direct-to-consumer brand in the $15 billion United States pool and spa care industry, serving residential and professional consumers.
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.
Of these, approximately 3,010 work within our physical network, 250 work as in-field service technicians, 340 work in our corporate office, and 250 work in our distribution centers. Our voluntary turnover rate over the past twelve months was 32%, with retail turnover at 36% and distribution center turnover at 16%.
Of these, approximately 2,990 work within our physical network, 210 work as in-field service technicians, 360 work in our corporate office, and 230 work in our distribution centers. 9 Table of Contents Our voluntary turnover rate over the past twelve months was 18% for corporate employees, and for all non-corporate roles including field team members, the turnover rate was 23%.
We plan to continue that legacy by developing and introducing capabilities that create value for our consumers. Present areas of focus include water testing, maintenance prescriptions, new product offerings, and our product distribution ecosystem. As the Internet of Things wave continues, we believe consumers will seek the convenience of “smart” home functionality in more facets of their daily lives.
Leslie’s has a legacy of disruptive innovation in the pool and spa care industry. We plan to continue that legacy by developing and introducing capabilities that create loyalty amongst our customers, provide novel solutions for pool owners, and create value for our shareholders. Present areas of focus include water testing, maintenance prescriptions, new product offerings, and our product distribution ecosystem.
Across our integrated platform, we have more than 12 million consumers who rely on us for their ongoing pool and spa care needs.
We are the largest national pool and spa care brand with a direct relationship with pool and spa owners and importantly, those who serve them. Our database includes over 12 million consumers who have relied on our integrated platform, for their ongoing pool and spa care needs.
We will explore opportunities to drive interest by selectively offering special incentives and rewards as well as introducing new value-added features. We believe these initiatives will drive higher transaction frequency and basket size, which will result in increased category spend and higher lifetime value with existing consumers. • Enhance retention marketing.
From our decades of experience, we know these initiatives will drive higher transaction frequency and basket size, resulting in increased category spend and higher lifetime value with existing consumers. • Enhance retention marketing. We believe there is opportunity to drive even greater retention and engagement with our customers and all pool and spa owners.
While we have historically been satisfied with our consumer retention metrics, we believe there is opportunity to drive even greater retention. We plan to do this by more actively leveraging our consumer database to personalize the consumer experience with targeted messaging and product recommendations. • Expand our product and service offering.
We plan to do this by more actively leveraging our consumer and service professionals’ databases to personalize each user’s experience with targeted messaging and product recommendations. • Expand our product and service offering. We plan to expand our offering by introducing new and innovative products and services in our existing categories and by expanding into adjacent categories.
We continue to assemble an affiliated network of qualified pool professionals through our PRO Partner program, further expanding the Leslie’s name into the professional channel. To better attract pool care professionals, we also have a dedicated Leslie’s PRO e-commerce website.
To better attract pool care professionals, we also have a dedicated Leslie’s PRO e-commerce website. This website provides all of the online tools needed for professionals to serve their respective communities and grow their pool care businesses. Continue our focus on the convenience Leslie’s can offer our customers.
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Founded in 1963, we are the only direct-to-consumer pool and spa care brand with national scale, operating an integrated marketing and distribution ecosystem powered by a physical network of over 1,000 branded locations and a robust digital and e-commerce platform.
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Our Company 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.
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We have a market-leading share of approximately 15% of residential aftermarket product spend as of 2023, our physical network is larger than the sum of our 20 largest competitors and our digital sales are estimated to be greater than five times as large as that of our largest digital competitor.
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With over 1,000 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.
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We operate primarily in the pool and spa aftermarket industry, which is one of the most fundamentally attractive consumer categories given its scale, predictability, and growth outlook. More than 80% of our assortment is comprised of non-discretionary products essential to the care of residential and commercial pools and spas.
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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.
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Since our founding in 1963, we have been the leading innovator in our category and have provided our consumers with the most advanced pool and spa care available. As we have scaled, we have leveraged our competitive advantages to strategically reinvest in our business and intellectual property to develop new value-added capabilities.
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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.
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Over the course of our history, we have pioneered complimentary in-store water testing, offered complimentary in-store equipment repair services, introduced the industry’s first loyalty program, and developed an expansive platform of owned and exclusive brands.
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We then brought AccuBlue ® direct to pool owners’ backyards with AccuBlue Home ® , a pioneering app-enabled water testing device.
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Our Competitive Strengths We believe that the following competitive strengths have been key drivers of our success to date, and strategically position us for continued success. Undisputed direct-to-consumer market leader in the aftermarket pool and spa care industry.
Added
While we sell many pool and spa services and solutions, we view our ultimate goal as enabling joy with family and friends.
Removed
Historically attractive financial profile characterized by consistent, profitable growth, and strong cash flow conversion offering multiple levers to drive shareholder value. We historically have had strong sales growth, demonstrating our ability to deliver strong financial results through all economic cycles.
Added
Further, our locations are strategically situated within 20 miles of 80% of pools in the country, and in the sunbelt, nearly 90% of pools are within a 15 mile radius of our locations, according to 2024 industry analyst reports.
Removed
Our growth has been broad-based across residential pool, residential spa, and professional pool consumers and has been driven by strong retention and profitable acquisition of sticky, long-term consumer relationships. Due to our scale, vertical integration, and operational excellence, we maintain a high ability to generate profitability.
Added
In addition to our owned and operated e-commerce websites, we also offer our products through online marketplaces such as Amazon, eBay, and Walmart. This year, we launched an exciting test partnership with a leading same-day delivery provider for many essential products, which we plan to sustainably expand.
Removed
Due to our low maintenance capital intensity, we maintain the ability to be flexible with investments and growth through the entire economic cycle. 4 Table of Contents Highly experienced and visionary leadership team that combines deep industry expertise and advanced direct-to-consumer capabilities.
Added
Our AccuBlue ® water test screens for 10 distinct water quality criteria including pH, total alkalinity, chlorine levels, cyanuric acid, and more, to determine the pool's health and safety.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

88 edited+39 added−15 removed145 unchanged
Biggest changeThe market price of our common stock may fluctuate significantly in response to numerous factors, many of which are beyond our control, including: • actual or anticipated fluctuations in our results of operations; • the financial projections we may provide to the public, any changes in these projections, or our failure to meet these projections; • failure of securities analysts to initiate or maintain coverage of us, changes in financial estimates or ratings or negative reports by any securities analysts who follow us or our failure to meet these estimates or the expectations of investors; • announcements by us or our competitors of significant technical innovations, acquisitions, strategic partnerships, joint ventures, results of operations, or capital commitments; • changes in operating performance and stock market valuations of other retail companies generally, or those in our industry in particular; • price and volume fluctuations in the overall stock market, including as a result of trends in the economy as a whole; • changes in our board of directors or management; • sales of large blocks of our common stock, including sales by our executive officers or directors; • lawsuits threatened or filed against us; • changes in laws or regulations applicable to our business; • changes in our capital structure, such as future issuances of debt or equity securities; • short sales, hedging, and other derivative transactions involving our capital stock; • the inability to execute on our share repurchase program as planned, including failure to meet internal or external expectations around the timing or price of share repurchases, and any reductions or discontinuances of repurchases thereunder; 24 Table of Contents • our performance with respect to ESG and other issues impacting our reputation; • general economic conditions in the United States, including high interest rates, inflationary pressures, and recession fears (including as a result of recent liquidity and financial stability concerns with respect to banks and financial institutions); • other events or factors, including those resulting from war, incidents of terrorism, pandemics, or other public health emergencies or responses to these events; and • other factors described in this section and “Cautionary Note Regarding Forward-Looking Statements.” An active trading market for our common stock may not be sustained.
Biggest changeThe market price of our common stock has fluctuated upwards and downwards significantly in the past and is likely to be volatile in the future in response to numerous factors, many of which are beyond our control, including: • actual or anticipated fluctuations in our results of operations; • the financial projections we may provide to the public, any changes in these projections, or our failure to meet these projections; • failure of securities analysts to initiate or maintain coverage of us, changes in financial estimates or ratings or negative reports by any securities analysts who follow us or our failure to meet these estimates or the expectations of investors; 25 Table of Contents • announcements by us or our competitors of significant technical innovations, acquisitions, strategic partnerships, joint ventures, results of operations, or capital commitments; • changes in operating performance and stock market valuations of other retail companies generally, or those in our industry in particular; • price and volume fluctuations in the overall stock market, including as a result of trends in the economy as a whole; • changes in our board of directors or management; • sales of large blocks of our common stock, including sales by our executive officers or directors; • lawsuits threatened or filed against us; • changes in laws or regulations applicable to our business; • changes in our capital structure, such as future issuances of debt or equity securities; • short sales, hedging, and other derivative transactions involving our capital stock; • our performance with respect to sustainability and other issues impacting our reputation; • general economic conditions in the United States, including high interest rates, inflationary pressures, and recession fears (including as a result of recent liquidity and financial stability concerns with respect to banks and financial institutions); • other events or factors, including those resulting from war, incidents of terrorism, pandemics, or other public health emergencies or responses to these events; and • other factors described in this section and “Cautionary Note Regarding Forward-Looking Statements.” As a result of this volatility, payouts under, as well as the incentive value of, our stock-based compensation arrangements for employees can fluctuate and investors may experience losses on their investment in our common stock.
This summary should be read in conjunction with Risk Factors below and should not be relied upon as an exhaustive summary of the material risks facing our business. The order of presentation is not necessarily indicative of the level of risk that each factor poses to us.
This summary should be read in conjunction with the Risk Factors below and should not be relied upon as an exhaustive summary of the material risks facing our business. The order of presentation is not necessarily indicative of the level of risk that each factor poses to us.
Consumer discretionary spending affects our sales and is impacted by factors outside of our control, including general economic conditions, the residential housing market, unemployment rates and wage levels, high interest rates, inflation, disposable income levels, consumer confidence, recession fears, and access to credit.
Consumer discretionary spending affects our sales and is impacted by factors outside of our control, including general economic conditions, the residential housing market, unemployment rates and wage levels, high interest rates, high inflation, disposable income levels, consumer confidence, recession fears, and access to credit.
Risks Related to the Manufacturing, Processing, and Supply of Our Products Our business includes the packaging and storage of chemicals and an accident related to these chemicals could subject us to liability and increased costs. We operate chemical repackaging facilities and we store chemicals in our locations and in our distribution facilities.
Risks Related to the Manufacturing, Processing, and Supply of Our Products Our business includes the packaging and storage of chemicals and an accident related to these chemicals could subject us to liability and increased costs. We operate chemical repackaging and manufacturing facilities and we store chemicals in our locations and in our distribution facilities.
Although our common stock is traded on the Nasdaq under the symbol “LESL”, there is a limited trading history on an active trading market for our common stock, which may not be sustained.
An active trading market for our common stock may not be sustained. Although our common stock is traded on the Nasdaq under the symbol “LESL”, there is a limited trading history on an active trading market for our common stock, which may not be sustained.
Our amended and restated certificate of incorporation and amended and restated bylaws include provisions that: • permit the board of directors to establish the number of directors and fill any vacancies and newly created directorships; • provide that a director may be removed only for cause and only by the affirmative vote of the holders of at least 66 2/3% in voting power of all the then-outstanding shares of stock of the Company entitled to vote thereon, voting together as a single class; • provide that the affirmative vote of the holders of at least 66 2/3% in voting power of all the then-outstanding shares of stock of the Company entitled to vote thereon, voting together as a single class, is required in order to amend certain provisions of our sixth amended and restated certificate of incorporation regarding the amendment of our sixth amended and restated certificate of incorporation, the composition and authority of our board of directors, the election and removal of directors, limitations of director liability, stockholder meetings, corporate opportunities, choice of forum and the interpretation of our sixth amended and restated certificate of incorporation; • authorize the board of directors to amend our bylaws without the assent or vote of shareholders, provided that stockholders may amend the bylaws with the affirmative vote of the holders of at least 66 2/3% in voting power of all the then-outstanding shares of stock of the Company entitled to vote thereon, voting together as a single class; • with the exception of actions required or permitted to be taken by the holders of preferred stock, prohibit stockholder action by written consent, instead requiring stockholder actions to be taken at a meeting of our stockholders; • permit our board of directors, without further action by our stockholders, to fix the rights, preferences, privileges, and restrictions of preferred stock, the rights of which may be greater than the rights of our common stock; • restrict the forum for certain litigation against us to Delaware; and • establish advance notice requirements for nominations for election to our board of directors or for proposing matters that can be acted upon by stockholders at annual stockholder meetings.
Our amended and restated certificate of incorporation and amended and restated bylaws include provisions that: • permit the board of directors to establish the number of directors and fill any vacancies and newly created directorships; • provide that a director may be removed only for cause and only by the affirmative vote of the holders of at least 66 2/3% in voting power of all the then-outstanding shares of stock of the Company entitled to vote thereon, voting together as a single class; • provide that the affirmative vote of the holders of at least 66 2/3% in voting power of all the then-outstanding shares of stock of the Company entitled to vote thereon, voting together as a single class, is required in order to amend certain provisions of our seventh amended and restated certificate of incorporation regarding the amendment of our seventh amended and restated certificate of incorporation, the composition and authority of our board of directors, the election and removal of directors, limitations of director liability, stockholder meetings, corporate opportunities, choice of forum and the interpretation of our seventh amended and restated certificate of incorporation; • authorize the board of directors to amend our bylaws without the assent or vote of shareholders, provided that stockholders may amend the bylaws with the affirmative vote of the holders of at least 66 2/3% in voting power of all the then-outstanding shares of stock of the Company entitled to vote thereon, voting together as a single class; • with the exception of actions required or permitted to be taken by the holders of preferred stock, prohibit stockholder action by written consent, instead requiring stockholder actions to be taken at a meeting of our stockholders; • permit our board of directors, without further action by our stockholders, to fix the rights, preferences, privileges, and restrictions of preferred stock, the rights of which may be greater than the rights of our common stock; • restrict the forum for certain litigation against us to Delaware; and • establish advance notice requirements for nominations for election to our board of directors or for proposing matters that can be acted upon by stockholders at annual stockholder meetings.
Natural or man-made disasters or extreme weather (including as a result of climate change), public health and safety issues, geopolitical events and conflicts (including terrorist attacks and armed hostilities), labor or trade disputes, macroeconomic crises (including any stemming from recent adverse developments in the financial services industry), and similar events can lead to uncertainty and have a negative impact on demand for our products, in addition to causing disruptions to our supply chain.
Natural or man-made disasters or extreme weather (including as a result of climate change), public health and safety issues, geopolitical events and conflicts (including terrorist attacks and armed hostilities), labor or trade disputes, macroeconomic crises (including any stemming from adverse developments in the financial services industry), and similar events can lead to uncertainty and have a negative impact on demand for our products, in addition to causing disruptions to our supply chain.
Risks Related to Our Indebtedness • Our substantial indebtedness could materially adversely affect our financial condition and our ability to operate our business. • Our ability to generate sufficient cash depends on numerous factors beyond our control, and we may be unable to generate sufficient cash flow to service our debt obligations. • Restrictive covenants in the agreements governing our Credit Facilities may restrict our ability to pursue our business strategies, and failure to comply with these restrictions could result in acceleration of our debt obligations. • Incurrence of substantially more debt could further exacerbate the risks associated with our substantial leverage.
Risks Related to Our Indebtedness • Our substantial indebtedness could adversely affect our financial condition and our ability to operate our business. • Our ability to generate sufficient cash depends on numerous factors beyond our control, and we may be unable to generate sufficient cash flow to service our debt obligations. • Restrictive covenants in the agreements governing our Credit Facilities may restrict our ability to pursue our business strategies, and failure to comply with these restrictions could result in acceleration of our debt obligations. • Incurrence of substantially more debt could further exacerbate the risks associated with our substantial leverage.
Our sixth amended and restated certificate of incorporation requires, to the fullest extent permitted by law, that (i) any derivative action or proceeding brought on our behalf, (ii) any action asserting a claim of breach of a fiduciary duty owed by any of our directors, officers, or other employees or stockholders to us or our stockholders, creditors or other constituents, or a claim of aiding and abetting any such breach of fiduciary duty, (iii) any action asserting a claim against us or our directors or officers arising pursuant to any provision of the Delaware General Corporation Law (“DGCL”) or our sixth amended and restated certificate of incorporation or our amended and restated bylaws or as to which the DGCL confers jurisdiction on the Court of Chancery of the State of Delaware, (iv) any action to interpret, apply, enforce or determine the validity of our sixth amended and restated certificate of incorporation or amended and restated bylaws, (v) any action asserting a claim against us or our directors or officers governed by the internal affairs doctrine or (vi) any action asserting an “internal corporate claim” as that term is defined in Section 115 of the DGCL will have to be brought only in the Court of Chancery of the State of Delaware (or if the Court of Chancery of the State of Delaware lacks subject matter jurisdiction, any other state court of the State of Delaware, or if no state court of the State of Delaware has subject matter jurisdiction, the federal district court for the District of Delaware), unless we consent in writing to the selection of an alternative forum.
Our seventh amended and restated certificate of incorporation requires, to the fullest extent permitted by law, that (i) any derivative action or proceeding brought on our behalf, (ii) any action asserting a claim of breach of a fiduciary duty owed by any of our directors, officers, or other employees or stockholders to us or our stockholders, creditors or other constituents, or a claim of aiding and abetting any such breach of fiduciary duty, (iii) any action asserting a claim against us or our directors or officers arising pursuant to any provision of the Delaware General Corporation Law (“DGCL”) or our seventh amended and restated certificate of incorporation or our amended and restated bylaws or as to which the DGCL confers jurisdiction on the Court of Chancery of the State of Delaware, (iv) any action to interpret, apply, enforce or determine the validity of our seventh amended and restated certificate of incorporation or amended and restated bylaws, (v) any action asserting a claim against us or our directors or officers governed by the internal affairs doctrine or (vi) any action asserting an “internal corporate claim” as that term is defined in Section 115 of the DGCL will have to be brought only in the Court of Chancery of the State of Delaware (or if the Court of Chancery of the State of Delaware lacks subject matter jurisdiction, any other state court of the State of Delaware, or if no state court of the State of Delaware has subject matter jurisdiction, the federal district court for the District of Delaware), unless we consent in writing to the selection of an alternative forum.
Our substantial debt could have important consequences to our stockholders, including the following: • it may be difficult for us to satisfy our obligations, including debt service requirements under our existing or future debt agreements, resulting in possible defaults on and acceleration of such debt; • our ability to obtain additional financing for working capital, capital expenditures, debt service requirements, or other general corporate purposes may be impaired; • a substantial portion of cash flow from operations may be dedicated to the payment of principal and interest on our debt, therefore reducing our ability to use our cash flow to fund our operations, capital expenditures, future business opportunities, and acquisitions or for other purposes; • we are more vulnerable to economic downturns and adverse industry conditions and our flexibility to plan for, or react to, changes in our business or industry is more limited; • our ability to capitalize on business opportunities and to react to competitive pressures, as compared to our competitors, may be compromised due to our high level of debt and restrictive covenants contained in the agreements governing our existing and any future debt; and • our ability to borrow additional funds or to refinance debt may be limited.
Our substantial debt could have important consequences to our stockholders, including but not limited to the following: • it may be difficult for us to satisfy our obligations, including debt service requirements under our existing or future debt agreements, resulting in possible defaults on and acceleration of such debt; • our ability to obtain additional financing for working capital, capital expenditures, debt service requirements, or other general corporate purposes may be impaired; • a substantial portion of cash flow from operations may be dedicated to the payment of principal and interest on our debt, therefore reducing our ability to use our cash flow to fund our operations, capital expenditures, future business opportunities, and acquisitions or for other purposes; • we are more vulnerable to economic downturns and adverse industry conditions and our flexibility to plan for, or react to, changes in our business or industry is more limited; • our ability to capitalize on business opportunities and to react to competitive pressures, as compared to our competitors, may be compromised due to our high level of debt and restrictive covenants contained in the agreements governing our existing and any future debt; and • our ability to borrow additional funds or to refinance debt may be limited.
Among other factors, a significant disruption to our supply chain for products we sell, as a result of macroeconomic and geopolitical developments, including public health crises or otherwise, could have a material impact on our sales and earnings. Summary of Risk Factors The following summarizes the risks facing our business, all of which are more fully described below.
Among other factors, a significant disruption to our supply chain for products we sell, as a result of macroeconomic and geopolitical developments, including public health crises or otherwise, could have a material impact on our sales and earnings. Summary of Risk Factors The following summarizes the risks facing our business, which are more fully described below.
Any failure by us to maintain or protect our information technology systems and data integrity, including from cyberattacks, intrusions, or other breaches, could result in the unauthorized access to consumer data, credit card information, and personally identifiable information, theft of intellectual property or other misappropriation of assets, or otherwise compromise our confidential or proprietary information and disrupt our operations, putting us at a competitive disadvantage.
Any failure by us to maintain or protect our information technology systems and data integrity, including from cyberattacks, intrusions, or other breaches, could result in unauthorized access to consumer data, credit card information, and personally identifiable information, theft of intellectual property or other misappropriation of assets, or otherwise compromise our confidential or proprietary information and disrupt our operations, putting us at a competitive disadvantage.
If we do not continue to maintain such favorable purchase terms with manufacturers, it could adversely affect our operating results. We depend on a network of suppliers to source our products, including our own branded products. Product quality, warranty claims, or safety concerns could negatively impact our sales and expose us to litigation.
However, if we do not continue to maintain such favorable purchase terms with manufacturers, it could adversely affect our operating results. We depend on a network of suppliers to source our products, including our own branded products. Product quality, warranty claims, or safety concerns could negatively impact our sales and expose us to litigation.
The current declines in our revenue and operating margins means our revenue and margin growth may be less than expected. If we are unable to scale our operations efficiently or maintain pricing power, we may fail to achieve expected operating margins, which would have a material and adverse effect on our operating results.
The current declines in our revenue and operating margins means our revenue and margin growth may be less than expected. If we are unable to scale our operations efficiently or maintain pricing power and competitive pricing, we may fail to achieve expected operating margins, which would have a material and adverse effect on our operating results.
Because some of the chemicals we repackage and store are hazardous materials, we must comply with various fire and safety ordinances. However, a release at a location or a fire at one of our facilities could give rise to liability claims against us and potential environmental liability.
Because some of the chemicals we repackage, manufacture and store are hazardous materials, we must comply with various fire and safety ordinances. However, a release at a location or a fire at one of our facilities could give rise to liability claims against us and potential environmental liability.
National home improvement and retailers, such as Home Depot, Lowe’s, and local and regional hardware stores, compete with us mainly on a seasonal basis during the spring and summer months, but experience significantly higher foot traffic than our retail locations.
National home improvement and retailers, such as Home Depot, Lowe’s, and local and regional hardware stores, typically compete with us mainly on a seasonal basis during the spring and summer months, but experience significantly higher foot traffic than our retail locations.
Our inability to successfully remediate our existing or any future material weaknesses or other deficiencies in our internal control over financial reporting or any failure to implement required new or improved controls, or difficulties encountered in the implementation or operation of these controls, could harm our operating results and cause us to fail to meet our financial reporting obligations or result in material misstatements in our financial statements, which could limit our liquidity and access to capital markets, adversely affect our business and investor confidence in us, and reduce our stock price. 28 Table of Contents Item 1B Unresolved Staff Comments None.
Our inability to successfully remediate our existing or any future material weaknesses or other deficiencies in our internal control over financial reporting or any failure to implement required new or improved controls, or difficulties encountered in the implementation or operation of these controls, could harm our operating results and cause us to fail to meet our financial reporting obligations or result in material misstatements in our financial statements, which could limit our liquidity and access to capital markets, adversely affect our business and investor confidence in us, and reduce our stock price. 29 Table of Contents Item 1B Unresolved Staff Comments None.
In addition, if an incident involves a repackaging or distribution facility, we might be required temporarily to use alternate sources of supply that could increase our cost of sales.
In addition, if an incident involves a repackaging, manufacturing or distribution facility, we might be required temporarily to use alternate sources of supply that could increase our cost of sales.
While we contemplate continued growth through internal expansion and acquisitions, we may not be able to: • acquire new consumers, retain existing consumers, and grow our share of the market; • penetrate new markets; • provide a relevant omni-channel experience to rapidly evolving consumer expectations through our proprietary mobile app and e-commerce websites; • generate sufficient cash flows or obtain sufficient financing to support expansion plans and general operating activities; • identify suitable acquisition candidates and successfully integrate acquired businesses; • maintain favorable supplier arrangements and relationships; and • identify and divest assets that do not continue to create value consistent with our objectives.
While we contemplate continued growth through internal expansion and acquisitions, we may not be able to: • acquire new consumers, retain existing consumers, and grow our share of the market; • penetrate new markets; • provide relevant omni-channel experiences to rapidly evolving consumer expectations through our proprietary mobile app and e-commerce websites; • generate sufficient cash flows or obtain sufficient financing to support expansion plans and general operating activities; • identify suitable acquisition candidates and successfully integrate acquired businesses; • maintain favorable supplier arrangements and relationships; and • identify and divest assets that do not continue to create value consistent with our objectives.
Further, in the event a court finds either exclusive forum provision contained in our sixth amended and restated certificate of incorporation to be unenforceable or inapplicable in an action, we may incur additional costs associated with resolving such action in other jurisdictions, which could harm our business, operating results, and financial condition.
Further, in the event a court finds either exclusive forum provision contained in our seventh amended and restated certificate of incorporation to be unenforceable or inapplicable in an action, we may incur additional costs associated with resolving such action in other jurisdictions, which could harm our business, operating results, and financial condition.
You should carefully consider the risks described below in addition to the other information set forth in this Annual Report on Form 10-K, including the Management’s Discussion and Analysis of Financial Condition and Results of Operations section and the consolidated financial statements and related notes, before making an investment decision.
You should carefully consider the risks, events and uncertainties described below in addition to the other information set forth in this Annual Report on Form 10-K, including the Management’s Discussion and Analysis of Financial Condition and Results of Operations section and the consolidated financial statements and related notes, before making an investment decision.
Our comparable sales growth could be, and been in the past, lower than our historical average or our target for many reasons, including general economic conditions, operational performance, price inflation or deflation, high interest rates, recession fears, industry competition, new competitive entrants near our locations, price changes in response to competitive factors, the impact of new locations entering the comparable base, cycling against any year or quarter of above-average sales results, unfavorable weather conditions, supply shortages or other operational disruptions, the number and dollar amount of consumer transactions in our locations, our ability to provide product or service offerings that generate new and repeat visits to our locations, and the level of consumer engagement that we provide in our locations.
Our comparable sales growth could be, and has been in the past, lower than our historical average or our target for many reasons, including general economic conditions, operational performance, price inflation or deflation, competitive price on similar products, high interest rates, recession fears, industry competition, new competitive entrants near our locations, price changes in response to competitive factors, the impact of new locations entering the comparable base, cycling against any year or quarter of above-average sales results, unfavorable weather conditions, supply shortages or other operational disruptions, the number and dollar amount of consumer transactions in our locations, our ability to provide product or service offerings that generate new and repeat visits to our locations, and the level of consumer engagement that we provide in our locations.
If we are unable to remediate these material weaknesses, or if we experience additional material weaknesses or other deficiencies in the future or otherwise fail to maintain an effective system of internal control over financial reporting, we may not be able to accurately or timely report our financial results, in which case our business may be harmed, investors may lose confidence in the accuracy and completeness of our financial reports, and our stock price could be adversely affected.
If we are unable to remediate these material weaknesses, or if we experience additional material weaknesses or other deficiencies in the future or otherwise fail to maintain an 28 Table of Contents effective system of internal control over financial reporting, we may not be able to accurately or timely report our financial results, in which case our business may be harmed, investors may lose confidence in the accuracy and completeness of our financial reports, and our stock price could be adversely affected.
Unfavorable economic conditions and downturn in the housing market can result in significant tightening of credit markets, which limit the ability of consumers to access financing for new swimming pools, spas, and related supplies, and consequently, replacement, repair, and maintenance of equipment.
Unfavorable economic conditions and downturns in the housing market can result in significant tightening of credit markets, which limit the ability of consumers to access financing for new swimming pools, spas, and related supplies, and consequently, replacement, repair, and maintenance of equipment.
If an active market for our common stock with meaningful trading volume is not maintained, the market price of our common stock may decline materially. Consequently, you may not be able to sell our common stock at prices equal to or greater than the price you paid.
If an active market for our common stock with meaningful trading volume is not maintained, the market price of our common stock may decline materially. Consequently, stockholders may not be able to sell our common stock at prices equal to or greater than the price paid.
Such agreements limit our ability, among other things, to: • incur additional debt or issue certain preferred shares; • pay dividends on or make distributions in respect of our common stock or make other restricted payments; • make certain investments; • sell certain assets; • create liens; • consolidate, merge, sell, or otherwise dispose of our assets; • make certain payments in respect of certain debt obligations; 23 Table of Contents • enter into certain transactions with our affiliates; and • designate our subsidiaries as unrestricted subsidiaries.
Such agreements limit our ability, among other things, to: • incur additional debt or issue certain preferred shares; • pay dividends on or make distributions in respect of our common stock or make other restricted payments; • make certain investments; • sell certain assets; • create liens; • consolidate, merge, sell, or otherwise dispose of our assets; • make certain payments in respect of certain debt obligations; • enter into certain transactions with our affiliates; and • designate our subsidiaries as unrestricted subsidiaries.
We utilize a national network of company-operated distribution centers as well as third-party operated distribution centers to manage the receipt, storage, sorting, packing and distribution of our merchandise to appropriate stores or to customers directly.
We utilize a national network consisting of a mix of company-operated distribution centers as well as third-party operated distribution centers to manage the receipt, storage, sorting, packing and distribution of our merchandise to appropriate stores or to customers directly.
These suppliers (and those they depend upon for materials and services) are subject to risks, including from natural or man-made disasters or extreme weather (including as a result of climate change), public health and safety issues, geopolitical events and conflicts (including terrorist attacks and armed hostilities), power outages, labor or trade disputes, union organizing activities, disruption to transportation routes, changes in tariffs or duties imposed on imported products or raw materials, financial liquidity problems, and similar events, as well as supply constraints and general economic, social, and political conditions that can limit their ability to provide us (or our suppliers) with quality products and services in a timely manner.
These suppliers (and those they depend upon for materials and services) are subject to risks, including from natural or man-made disasters or extreme weather (including as a result of climate change), public health and safety issues, geopolitical events and conflicts (including terrorist attacks and armed hostilities), power outages, labor or trade disputes, union organizing activities, disruption to transportation routes, changes in tariffs or duties imposed on imported products or raw materials, financial liquidity 20 Table of Contents problems, and similar events, as well as supply constraints and general economic, social, and political conditions that can limit their ability to provide us (or our suppliers) with quality products and services in a timely manner and at reasonable cost.
If we do not manage these factors successfully, our operating results could be adversely affected. 13 Table of Contents We may not be able to successfully manage our inventory to match consumer demand, which could have a material adverse effect on our business, financial condition, and results of operations. We base our inventory purchases, in part, on our sales forecasts.
If we do not manage these factors successfully, our operating results could be adversely affected. We may not be able to successfully manage our inventory to match consumer demand, which could have a material adverse effect on our business, financial condition, and results of operations. We base our inventory purchases, in part, on our sales forecasts.
If we are unable to locate, attract, or retain qualified personnel, or if costs of labor or other related costs increase significantly, our financial performance could be adversely affected. We are subject to, and may in the future be subject to, legal or other proceedings that could have a material adverse effect on us.
If we are unable to locate, attract, or retain qualified personnel, or if costs of labor or other related costs increase significantly, our financial performance could be adversely affected. 14 Table of Contents We are subject to, and may in the future be subject to, legal or other proceedings that could have a material adverse effect on us.
As a result, these provisions may adversely affect the market price and market for our common stock if they are viewed as limiting the liquidity of our stock or as discouraging takeover attempts in the future. 26 Table of Contents The provision of our sixth amended and restated certificate of incorporation, requiring exclusive forum in certain courts in the State of Delaware or the federal district court for the District of Delaware for certain types of lawsuits, may have the effect of discouraging lawsuits against our directors and officers.
As a result, these provisions may adversely affect the market price and market for our common stock if they are viewed as limiting the liquidity of our stock or as discouraging takeover attempts in the future. 27 Table of Contents The provision of our seventh amended and restated certificate of incorporation, requiring exclusive forum in certain courts in the State of Delaware or the federal district court for the District of Delaware for certain types of lawsuits, may have the effect of discouraging lawsuits against our directors and officers.
Failure to do so can harm our profitability and long-term growth prospects. Any significant interruption to the operations of our distribution centers could affect our ability to distribute our products in a timely manner, which could adversely impact our business and financial condition.
Failure to do so can harm our profitability and long-term growth prospects. 21 Table of Contents Any significant interruption to the operations of our distribution centers could affect our ability to distribute our products in a timely manner, which could adversely impact our business and financial condition.
Technology and Privacy Related Risks • If our online systems do not function effectively, our operating results could be adversely affected. • Any limitation or restriction to sell on online platforms could harm our profitability. • A significant disturbance or breach of our technological infrastructure could adversely affect our financial condition and results of operations. 11 Table of Contents • Improper activities by third parties and other events or developments may result in future intrusions into or compromise of our networks, payment card terminals, or other payment systems .
Technology and Privacy Related Risks • If our online systems do not function effectively, our operating results could be adversely affected. • Any limitation or restriction on our ability to sell via online platforms could harm our profitability. • A significant disturbance or breach of our technological infrastructure could adversely affect our financial condition and results of operations. • Improper activities by third parties and other events or developments may result in future intrusions into or compromise of our networks, payment card terminals, or other payment systems .
In addition, actual or anticipated downward pressure on our stock price due to actual or anticipated sales of stock by our directors or officers could cause other institutions or individuals to engage in short sales of our common stock, which may further cause the price of our stock to decline.
In addition, actual or anticipated downward pressure on our stock price due to actual or anticipated sales of stock by our 26 Table of Contents directors or officers could cause other institutions or individuals to engage in short sales of our common stock, which may further cause the price of our stock to decline.
Failure to comply with these guidelines or standards may result in the imposition of financial penalties or the allocation by debit and credit card companies of the costs of fraudulent charges to us.
Failure to comply with these guidelines or standards may result in the imposition of financial penalties or the allocation by debit and 18 Table of Contents credit card companies of the costs of fraudulent charges to us.
As a result, management believes that period-to-period comparisons of results of operations are not necessarily 15 Table of Contents meaningful and should not be relied upon as any indication of future performance or results.
As a result, management believes that period-to-period comparisons of results of operations are not necessarily meaningful and should not be relied upon as any indication of future performance or results.
Item 1A. Ri sk Factors. Investing in our common stock involves a high degree of risk.
Item 1A. Ri sk Factors. Investing in our common stock involves a high degree of risk and uncertainty.
If these efforts become less successful, we may not be able to maintain or improve the levels of comparable sales that we have experienced in the past, which could adversely impact our profitability and overall business results. In addition, competition and pricing pressures from competitors may also materially adversely impact our operating margins.
If these efforts become less successful, we may not be able to maintain or improve the levels of comparable sales that we have experienced in the past, which could adversely impact our profitability; competition and pricing pressures from competitors may also adversely impact our operating margins.
Risks Related to the Nature of Our Business Our success depends on our ability to maintain or increase comparable sales, and if we are unable to achieve comparable sales growth, our profitability and performance could be materially adversely impacted. Our success depends on increasing comparable sales through our merchandising strategy and on our ability to increase sales and profits.
Risks Related to the Nature of Our Business Our success depends on our ability to maintain or increase comparable sales, and if we are unable to achieve comparable sales growth, our profitability and performance could be materially adversely impacted.
Risks Related to Our Industry and the Broader Economy • We face competition by manufacturers, retailers, distributors, and service providers in the residential and professional pool and spa care market. • The demand for our swimming pool and spa related products and services may be adversely affected by unfavorable economic conditions. • The demand for pool chemicals may be affected by consumer attitudes towards products for environmental or safety reasons. • Our results of operations may fluctuate from quarter to quarter for many reasons, including seasonality. • Adverse developments affecting the financial services industry, such as actual events or concerns involving liquidity, defaults, or non-performance by financial institutions or transactional counterparties, could adversely affect our current and projected business operations and our financial condition and results of operations. • We maintain our cash at financial institutions in balances that may exceed federally insured limits. • We are susceptible to adverse weather conditions.
Risks Related to Our Industry and the Broader Economy • We face competition from manufacturers, retailers, distributors, and service providers in the residential and professional pool and spa care market. • The demand for our swimming pool and spa-related products and services may be adversely affected by unfavorable economic conditions. • Adverse developments in the housing industry could slow the install of new pools and spas and thus impact demand for our products. • The demand for pool chemicals may be affected by consumer attitudes towards products for environmental or safety reasons. 11 Table of Contents • Our results of operations may fluctuate from quarter to quarter for many reasons, including cyclicality and seasonality. • Adverse developments affecting the financial services industry, such as actual events or concerns involving prevailing interest rates, liquidity, defaults, or non-performance by financial institutions or transactional counterparties, could adversely affect our current and projected business operations and our financial condition and results of operations. • We maintain our cash at financial institutions in balances that may exceed federally insured limits. • We are susceptible to adverse weather conditions.
Risks Related to the Manufacturing, Processing, and Supply of Our Products • Our business includes the packaging and storage of chemicals, and an accident related to these chemicals could subject us to liability and increased costs. • Product supply disruptions may have an adverse effect on our profitability and operating results. • The cost of raw materials could increase our cost of goods sold and cause our results of operations and financial condition to suffer.
Risks Related to the Manufacturing, Processing, and Supply of Our Products • Our business includes the packaging and storage of chemicals, and an accident related to these chemicals could subject us to liability and increased costs. • Our product assortment may be subject to increased regulatory oversight, increasing our cost of goods sold and our competitive pricing power. • Product supply disruptions may have an adverse effect on our profitability and operating results. • The cost of raw materials could increase our cost of goods sold and cause our results of operations and financial condition to suffer.
In addition, our processes and controls may not comply with evolving standards for identifying, measuring, and reporting ESG metrics, including ESG-related disclosures that may be required of public companies by the SEC or state governments, and such standards may change over time, which could result in significant revisions to our current goals, reported progress in achieving such goals, or ability to achieve such goals in the future.
In addition, our processes and controls may not comply with evolving standards for identifying, measuring, and reporting sustainability metrics, including sustainability -related disclosures that may be required of companies by U.S. federal or state governments and other regulators, and such standards may change over time, which could result in significant revisions to our existing processes and controls, reporting, and current goals, reported progress in achieving such goals, or ability to achieve such goals in the future.
Certain extreme weather events, such as hurricanes and tropical storms, may impact demand for our products and services, our ability to deliver our products, provide services, continue to keep our facilities open and operational, cause damage to our facilities, or impact our business in other ways.
Certain extreme weather events, such as hurricanes and tropical storms, may become more frequent, and when such events occur, they can impact demand for our products and services, our ability to deliver our products, provide services, continue to keep our facilities open and operational, cause damage to our facilities, or impact our business in other ways.
However, failure to comply with these laws and regulations may result in investigations, the assessment of administrative, civil and criminal fines, damages, seizures, disgorgements, penalties, or the imposition of injunctive relief. Moreover, compliance with such laws and regulations in the future could prove to be costly.
However, failure to comply with these laws and regulations, which have become increasingly varied in different regions in which we operate, may result in investigations, the assessment of administrative, civil and criminal fines, damages, seizures, disgorgements, penalties, or the imposition of injunctive relief. Moreover, compliance with such laws and regulations in the future could prove to be costly.
If we are not successful in our defense of or are not successful in obtaining dismissals of any such lawsuit, legal fees or settlement costs could have a material adverse effect on our results of operations and financial position.
Patent infringement lawsuits can take years to settle. If we are not successful in our defense of or are not successful in obtaining dismissals of any such lawsuit, legal fees or settlement costs could have a material adverse effect on our results of operations and financial position.
The risks described below are not the only risks or uncertainties we face. The occurrence of any of the following risks or additional risks and uncertainties not presently known to us, or that we currently believe to be immaterial, could materially and adversely affect our business, financial condition, prospects, or results of operations.
The occurrence of any of the following risks and uncertainties or additional risks, events and uncertainties not presently known to us, or that we currently believe to be immaterial, could materially and adversely affect our business, financial condition, prospects, results of operations, cash flows or liquidity.
Risks Related to the Nature of Our Business • If we are unable to achieve comparable sales growth, our profitability and performance could be materially adversely impacted. • Past growth may not be indicative of future growth. • We may not be able to successfully manage our inventory to match consumer demand. • Loss of key members of management could adversely affect our business. • Our business is significantly dependent on our ability to meet our labor needs. • We are subject to legal or other proceedings that could have a material adverse effect on us. • Disruptions from disasters and similar events could have a material adverse effect on our business.
Risks Related to the Nature of Our Business • If we are unable to achieve comparable sales growth, our profitability and performance could be materially adversely impacted. • Past growth may not be indicative of future growth. • We may not be able to successfully manage our inventory to match consumer demand. • Loss of key members of management could adversely affect our business. • Our business is significantly dependent on our ability to meet our labor needs. • We are subject to legal or other proceedings that could have a material adverse effect on us. • Disruptions from natural disasters and similar weather-driven events could have a material adverse effect on our business. • Our business is in a highly competitive industry subject to regional preferences and variations, and where we face competition from certain of our suppliers, online platforms and mass merchants.
Risks Related to Ownership of Our Common Stock • Our stock price may be volatile, resulting in substantial losses for investors. • An active trading market for our common stock may not be sustained. • Future sales of common stock by existing stockholders could cause our stock price to decline. 12 Table of Contents • Transactions engaged in by our principal stockholders, our officers or directors involving our common stock may have an adverse effect on the price of our stock. • We do not intend to pay dividends for the foreseeable future. • Anti-takeover provisions in our charter documents and under Delaware law could limit certain stockholder actions. • Certain provisions of our sixth amended and restated certificate of incorporation may have the effect of discouraging lawsuits against our directors and officers. • We will continue to incur increased costs as a result of being a public company. • We have identified material weaknesses in our internal control over financial reporting.
Risks Related to Ownership of Our Common Stock • Our stock price may be volatile, resulting in substantial losses for investors. • An active trading market for our common stock may not be sustained. • Future sales of common stock by existing stockholders could cause our stock price to decline. • Transactions engaged in by our principal stockholders, our officers or directors involving our common stock may have an adverse effect on the price of our stock. • We do not intend to pay dividends for the foreseeable future. • Anti-takeover provisions in our charter documents and under Delaware law could limit certain stockholder actions. • Certain provisions of our seventh amended and restated certificate of incorporation may have the effect of discouraging lawsuits against our directors and officers. • We will continue to incur increased costs as a result of being a public company. • Our inability to remediate material weaknesses, our identification of any additional weaknesses, or our inability to achieve and maintain effective disclosure controls and procedures and internal control over financial reporting in a timely manner could adversely affect our results of operations, our stock price and investor confidence in us.
Furthermore, all of our debt under our Credit Facilities bears interest at variable rates. If these rates were to increase significantly, our ability to borrow additional funds may be reduced and the risks related to our substantial debt would intensify. Servicing our debt requires a significant amount of cash.
If these rates were to increase significantly, our ability to borrow additional funds may be reduced and the risks related to our substantial debt would intensify. Servicing our debt requires a significant amount of cash.
Our operating results will be harmed if we are unable to effectively manage and sustain our future growth or scale our operations. We experienced a decline in sales, and thus profitability, between the Fiscal Year ending September 23, 2023, and the Fiscal Year ending September 28, 2024.
Our operating results will be harmed if we are unable to effectively manage and sustain our future growth or scale our operations. We experienced a decline in sales, and thus profitability, beginning the fiscal years ending September 30, 2023, through the fiscal year ending October 4, 2025.
The price of granular chlorine compounds may increase in the future and we may not be able to pass on any such increase to our consumers. We purchase granular chlorine compounds primarily from the nation’s largest suppliers.
In the past, we have generally been able to pass along chlorine price increases to our consumers. However should the price of granular chlorine compounds increase in the future, we may not be able to pass on any such increase to our consumers. We purchase granular chlorine compounds primarily from the nation’s largest suppliers.
Future sales of common stock by existing stockholders could cause our stock price to decline. If our existing stockholders sell, or indicate an intention to sell, substantial amounts of our common stock in the public market the trading price of our common stock could be adversely impacted. As of November 26, 2024, we had 184,969,296 shares of common stock outstanding.
Future sales of common stock by existing stockholders could cause our stock price to decline. If our existing stockholders sell, or indicate an intention to sell, substantial amounts of our common stock in the public market the trading price of our common stock could be adversely impacted. As of December 5, 2025, we had 9,290,311 shares of common stock outstanding.
Work stoppages, labor shortages, operations below historical efficiency levels, supply chain disruptions, inclement weather, or other unforeseen events in the areas or regions in which these distribution centers operate could impair our ability to adequately stock our stores, ship products to our e-commerce customers, process returns of products, and may adversely affect our sales and profitability. 20 Table of Contents If we do not continue to obtain favorable purchase terms with manufacturers, it could adversely affect our operating results.
Work stoppages, labor shortages, operations below historical efficiency levels, supply chain disruptions, inclement weather, or other unforeseen events in the areas or regions in which these distribution centers operate could impair our ability to adequately stock our stores, ship products to our e-commerce customers, process returns of products, and may adversely affect our sales and profitability.
In addition, we sell algaecides and related products that are regulated under the Federal Insecticide, Fungicide and Rodenticide Act, and various state pesticide laws. These laws primarily relate to labeling, annual registration, and licensing.
In addition, we sell algaecides and related products that are regulated under the Federal Insecticide, Fungicide and Rodenticide Act, and various state pesticide laws.
Restrictive covenants in the agreements governing our Credit Facilities may restrict our ability to pursue our business strategies, and failure to comply with any of these restrictions could result in acceleration of our debt.
In addition, the terms of our existing or future debt agreements may restrict us from pursuing any of these alternatives. 24 Table of Contents Restrictive covenants in the agreements governing our Credit Facilities may restrict our ability to pursue our business strategies, and failure to comply with any of these restrictions could result in acceleration of our debt.
We may not be able to effect any of these actions on a timely basis, on commercially reasonable terms or at all, and these actions may not be sufficient to meet our capital requirements. In addition, the terms of our existing or future debt agreements may restrict us from pursuing any of these alternatives.
We may not be able to effect any of these actions on a timely basis, on commercially reasonable terms or at all, and these actions may not be sufficient to meet our capital requirements.
Historically, mass-market retailers have generally expanded by adding new stores and product breadth, but their product offerings of pool-related products have remained relatively constant. If pool and spa owners are attracted by the convenience afforded by any of our competitors, they may be less inclined to purchase products and/or services from us.
Historically, mass-market retailers have generally expanded by adding new stores and product breadth, but their product offerings of pool-related products have remained relatively constant.] If pool and spa owners are attracted by the convenience afforded by any of our competitors, they may be less inclined to purchase products and/or services from us. 15 Table of Contents In addition, new competitors may emerge as there are no proprietary technologies or other significant barriers to prevent other firms from entering the swimming pool and spa supply retail market in the future.
Any failure on our part to provide an attractive, effective, reliable, and user-friendly digital platform that offers a wide assortment of merchandise with rapid delivery options and that meets the changing expectations of online shoppers could place us at a competitive disadvantage, result in the loss of e-commerce and other sales, harm our reputation with consumers, have a material adverse impact on the growth of our e-commerce business globally, and could have a material adverse impact on our business and results of operations.
Any failure on our part to provide an attractive, effective, reliable, and user-friendly digital platform that offers a wide assortment of merchandise with rapid delivery options and that meets the changing expectations of online shoppers could place us at a competitive disadvantage, result in the loss of e-commerce and other sales, harm our reputation with consumers, have a material adverse impact on the growth of our e-commerce business globally, and could have a material adverse impact on our business and results of operations. 17 Table of Contents Our e-commerce operation faces distinct risks, such as the failure to make and implement changes to our e-commerce websites and mobile app, the failure to maintain a relevant consumer experience in understanding and interacting with our e-commerce websites and mobile app, telecommunications disruptions, reliance on third-party software technologies, and rapid changes in technology, among others.
Risks Related to Intellectual Property Matters • If we are unable to adequately protect our intellectual property rights, our competitive position could be harmed or we could be required to incur significant expenses to enforce or defend our rights. • If we infringe on or misappropriate the proprietary rights of others, we may be liable for damages.
Risks Related to Government Regulation • The nature of our business subjects us to compliance with employment, environmental, health, transportation, safety, and other governmental regulations. 12 Table of Contents Risks Related to Intellectual Property Matters • If we are unable to adequately protect our intellectual property rights, our competitive position could be harmed or we could be required to incur significant expenses to enforce or defend our rights. • If we infringe on or misappropriate the proprietary rights of others, we may be liable for damages.
While warmer weather conditions favorably impact our sales, global warming trends and other significant climate changes can create more variability in the short-term or lead to other unfavorable weather conditions that could adversely impact our sales or operations. Drought conditions or water management initiatives sometimes lead to municipal ordinances related to water use restrictions.
While warmer weather conditions favorably impact our sales, global warming trends and other significant climate changes can create more variability in the short-term or lead to other unfavorable weather conditions that could adversely impact our sales or operations and could make our operations, seasonality and sales cycles less predictable than in previous years.
This may result in a lack of consistent or meaningful comparative data from period to period or between us and other companies in the same industry.
Our selection of voluntary disclosure frameworks and standards, and the interpretation or application of those frameworks and standards, may change from time -to-time or differ from those of others. This may result in a lack of consistent or meaningful comparative data from period to period or between us and other companies in the same industry.
Risks Related to Our Business Strategy • We may acquire other companies or technologies, which could fail to result in a commercial product and otherwise disrupt our business. • Our operating results will be harmed if we are unable to effectively manage and sustain our future growth or scale our operations. • Our aspirations and disclosures related to ESG matters expose us to risks that could adversely affect our reputation and performance.
Risks Related to Our Business Strategy • We may acquire other companies or technologies, which could fail to result in a commercialized products and otherwise disrupt our business. • Changing consumer preferences and demographic shifts could impact the demand for pool and spa care products sold via our retail networks. • Our operating results will be harmed if we are unable to effectively manage and sustain our future growth or scale our operations. • If we are unable to streamline our operations effectively, our business, financial condition and results of operations may be adversely affected. • Our aspirations and disclosures related to sustainability matters expose us to risks that could adversely affect our reputation and performance.
As a result, stockholders must rely on sales of their common stock after price appreciation as the only way to realize any future gains on their investment. 25 Table of Contents Anti-takeover provisions in our charter documents and under Delaware law could make an acquisition of us more difficult, limit attempts by our stockholders to replace or remove our current management, and limit the market price of our common stock.
Anti-takeover provisions in our charter documents and under Delaware law could make an acquisition of us more difficult, limit attempts by our stockholders to replace or remove our current management, and limit the market price of our common stock.
The potential for natural or man-made disasters or extreme weather, geopolitical events and conflicts, labor or trade disputes, macroeconomic crises, and similar events could create these types of uncertainties and negatively impact our business for the short- or long-term in ways that cannot presently be predicted. 14 Table of Contents Risks Related to Our Industry and the Broader Economy We face competition by manufacturers, retailers, distributors, and service providers in the residential and professional pool and spa care market.
The potential for natural or man-made disasters or extreme weather, geopolitical events and conflicts, labor or trade disputes, macroeconomic crises, and similar events could create these types of uncertainties and negatively impact our business for the short- or long-term in ways that cannot presently be predicted.
In such case, the trading price of our common stock could decline, and you may lose all or part of your original investment. Our actual results could differ materially from those anticipated in the forward-looking statements as a result of specific factors, including the risks and uncertainties described below.
Our actual results and outcomes, or the timing of our results and outcomes, could differ materially from those anticipated in the forward-looking statements as a result of specific factors, including the risks and uncertainties described below.
If our ESG practices do not meet evolving investor or other stakeholder expectations and standards, then our reputation, our ability to attract or retain employees, and our attractiveness as an investment or partner could be negatively impacted.
Our sustainability practices may not satisfy all investor or other stakeholder expectations and standards, which are evolving and varied and may not align with our sustainability strategy. As a result, our reputation, our ability to attract or retain employees, and our attractiveness as an investment or partner could be negatively impacted.
Although we presently do not expect to incur any capital or other expenditures relating to regulatory matters in amounts that may be material to us, we may be required to make such expenditures in the future.
Although we presently do not expect to incur any material capital or other expenditures relating to regulatory matters we may be required to make such expenditures in the future. These laws and regulations have changed substantially and rapidly in recent years, and we anticipate that there will be continuing changes.
Most raw materials and those products not repackaged by us are purchased directly from manufacturers. It is common in the swimming pool supply industry for certain manufacturers to offer extended payment terms on certain products to quantity purchasers such as us. These payment terms typically include favorable pricing and are available to us for pre-season or early season purchases.
It is common in the swimming pool supply industry for certain manufacturers to offer extended payment terms on certain products to volume purchasers like us. These payment terms typically include favorable pricing and are available to us for pre-season or early season purchases so that we are able to meet anticipated demand each year.
To the extent such restrictions result in decreased pool installations, our sales could be negatively impacted.
Drought conditions or water management initiatives sometimes lead to municipal ordinances related to water use restrictions. To the extent such restrictions result in decreased pool installations, our sales could be negatively impacted.
As a consequence of these or other catastrophic or uncharacteristic events, we may experience interruption to our operations, increased costs or loss of property, equipment or inventory, which would adversely affect our revenue and profitability. 16 Table of Contents Technology and Privacy Related Risks If the technology-based systems that give our consumers the ability to shop with us online do not function effectively, our operating results, as well as our ability to grow our e-commerce business globally, could be materially adversely affected.
Technology and Privacy Related Risks If the technology-based systems that give our consumers the ability to shop with us online do not function effectively, our operating results, as well as our ability to grow our e-commerce business globally, could be materially adversely affected.
Within our industry, competition is highly fragmented. We compete against a wide range of manufacturers, retailers, distributors, and service providers in the residential and professional pool and spa care market. This includes original equipment manufacturers, regional and local retailers, home improvement retailers, mass-market retailers, and specialty e-commerce operators. Most of our competition comes from regional and local independent retailers.
Risks Related to Our Industry and the Broader Economy We face competition from manufacturers, retailers, distributors, and service providers in the residential and professional pool and spa care market. Within our industry, competition is highly fragmented. We compete against a wide range of manufacturers, retailers, distributors, and service providers in the residential and professional pool and spa care market.
We currently intend to retain any future earnings to finance the operation and expansion of our business and we do not expect to declare or pay any dividends in the foreseeable future.
We currently intend to retain any future earnings to finance the operation and expansion of our business and we do not expect to declare or pay any dividends in the foreseeable future. As a result, stockholders must rely on sales of their common stock after price appreciation as the only way to realize any future gains on their investment.
The occurrence of these or other unexpected events can cause us to suffer significant product inventory losses and significant lost revenue. 19 Table of Contents The cost of raw materials could increase our cost of goods sold and cause our results of operations and financial condition to suffer.
The occurrence of these or other unexpected events can cause us to suffer significant product inventory losses, and significant lost revenue, and increased cost of sales.
These factors may cause our comparable sales results to be materially lower than in recent periods, which could harm our profitability and business. Past growth may not be indicative of future growth. Historically, we have experienced sales growth through organic market share gains, new location openings, and acquisitions that have increased our size, scope, and geographic footprint.
These factors may cause our comparable sales results to be materially lower than in recent periods, which could harm our profitability and business. 13 Table of Contents Past growth may not be indicative of future growth.
Our principal chemical raw materials are granular chlorine compounds, which are commodity materials. The prices of granular chlorine compounds are a function of, among other things, manufacturing capacity and demand. We have generally passed through chlorine price increases to our consumers.
The cost of raw materials could increase our cost of goods sold and cause our results of operations and financial condition to suffer. Our principal chemical raw materials are granular chlorine compounds, which are commodity materials. The prices of granular chlorine compounds are a function of, among other things, manufacturing capacity and demand.
In addition, a required license may be non-exclusive, and therefore our competitors may have access to the same technology licensed to us. If we fail to obtain a required license or are unable to design around another company’s patent, we may be unable to make use of some of the affected products, which would reduce our revenues.
If we fail to obtain a required license or are unable to design around another company’s patent, we may be unable to make use of some of the affected products, which would reduce our revenues. 23 Table of Contents The defense costs and settlements for patent infringement lawsuits are not covered by insurance.
Tightening consumer credit could prevent consumers from obtaining financing for pool and spa projects, which could negatively impact our sales of products and services. The demand for pool chemicals may be affected by consumer attitudes towards products for environmental or safety reasons. We could be adversely affected if consumers lose confidence in the safety and quality of our products.
These developments could, in the aggregate, be materially adverse to our growth prospects in future years by reducing the demand for our products. The demand for pool chemicals may be affected by consumer attitudes towards products for environmental or safety reasons. We could be adversely affected if consumers lose confidence in the safety and quality of our products.
Such a breach could result in damage to our reputation and subject us to potential litigation, liability, fines, and penalties, resulting in a possible material adverse impact on our financial condition and results of operations. 17 Table of Contents Improper activities by third parties, exploitation of encryption technology, new data-hacking tools and discoveries, and other events or developments may result in future intrusions into or compromise of our networks, payment card terminals, or other payment systems.
Improper activities by third parties, exploitation of encryption technology, new data-hacking tools and discoveries, and other events or developments may result in future intrusions into or compromise of our networks, payment card terminals, or other payment systems.
These laws and regulations have changed substantially and rapidly in recent years, and we anticipate that there will be continuing changes. 21 Table of Contents The current trend in environmental, health, transportation, and safety regulations is to place more restrictions and limitations on activities that impact the environment, such as the use and handling of chemicals.
There has been a general trend in environmental, health, transportation, and safety regulations to place more restrictions and limitations on activities that impact the environment, such as the use and handling of chemicals.
Adverse developments affecting the financial services industry, such as actual events or concerns involving liquidity, defaults, or non-performance by financial institutions or transactional counterparties, could adversely affect our current and projected business operations and our financial condition and results of operations.
In addition, because our revenues are concentrated to a limited number of months, our business is more susceptible to adverse events occurring in those months than other businesses that have consistent levels of revenue throughout the year. 16 Table of Contents Adverse developments affecting the financial services industry, such as actual events or concerns involving prevailing interest rates, liquidity, defaults, or non-performance by financial institutions or transactional counterparties, could adversely affect our current and projected business operations and our financial condition and results of operations.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeAs part of such reviews, the audit committee receives reports and presentations from members of our team responsible for overseeing the Company’s cybersecurity risk management, including certain IT leadership and our legal team, which may address a wide range of topics including recent developments, evolving standards, vulnerability assessments, third-party and independent reviews, the threat environment, technological trends and information security considerations arising with respect to the Company’s peers and third parties.
Biggest changeAs part of such reviews, the audit committee receives reports and presentations from the CIO and members of our team responsible for overseeing the Company’s cybersecurity risk management, including our legal team, which may address a wide range of topics.
The committee meets regularly to discuss the risk management measures implemented by the Company to identify and mitigate data protection and cyber security risks. Certain IT leadership and the General Counsel attend each cybersecurity risk management committee meeting to report on ongoing cybersecurity matters.
The committee meets regularly to discuss the risk management measures implemented by the Company to help identify and mitigate data protection and cyber security risks. Certain IT leadership and the General Counsel attend each cybersecurity risk management committee meeting to report on ongoing cybersecurity matters.
Our board of directors, with assistance from the audit committee, oversees the Company’s management of risks arising from cybersecurity threats. The audit committee regularly reviews the measures implemented by the Company to identify and mitigate risks from cybersecurity threats.
Our board of directors, with assistance from the audit committee, oversees the Company’s management of risks arising from cybersecurity threats. The audit committee regularly reviews the measures implemented by the Company to help identify and mitigate risks from cybersecurity threats.
Item 1C. Cybersecurity We have implemented and maintain a robust cybersecurity program to assess, identify, and manage risks from cybersecurity threats that may result in material adverse effects on the confidentiality, integrity, and availability of our information systems and the data residing therein.
Item 1C. Cybersecurity We have implemented and continue to maintain a robust cybersecurity program intended to assess, identify, and manage risks from cybersecurity threats that may result in material adverse effects on the confidentiality, integrity, and availability of our information systems and the data residing therein.
The audit committee also reports to the board of directors at least annually on cybersecurity matters. We have an incident response plan under which certain cybersecurity incidents are escalated within the Company to senior executives on the cybersecurity risk management committee, and, where appropriate, reported to the Board and Audit Committee in a timely manner.
We have an incident response plan under which certain cybersecurity incidents are escalated within the Company to senior executives on the cybersecurity risk management committee, and, where appropriate, reported to the board of directors and audit committee in a timely manner.
Additional information on cybersecurity risks we face can be found in Part I, Item 1A “Risk Factors” of this Report. 29 Table of Contents
Additional information on cybersecurity risks we face can be found in Part I, Item 1A “Risk Factors” of this Annual Report on Form 10-K. 30 Table of Contents
In the last fiscal year, we have not identified risks from known cybersecurity threats, including as a result of any prior cybersecurity incidents, that have materially affected us, but we face certain ongoing cybersecurity risks threats that if realized, are reasonably likely to materially affect us.
In the last fiscal year, we have not identified risks from known cybersecurity threats, including as a result of any prior cybersecurity incidents, that have materially affected us.
For example, we regularly conduct penetration and vulnerability testing, security audits, and tabletop exercises. We conduct regular employee training on cybersecurity. We also employ systems and processes designed to oversee, identify, and reduce the potential impact of a security incident at a third-party vendor, service provider or customer that otherwise implicates third-party technology and systems we use.
We also employ systems and processes designed to oversee, identify, and reduce the potential impact of a security incident at a third-party vendor, service provider or customer that otherwise implicates third-party technology and systems we use.
The cybersecurity team receives reports on cybersecurity threats from a number of experienced information security team members responsible for various parts of the business periodically and in conjunction with management, regularly reviews risk management measures implemented by the Company to identify and mitigate data protection and cybersecurity risks.
This team receives reports on cybersecurity threats from various business teams, and in conjunction with management, regularly reviews risk management measures implemented by the Company to help identify and mitigate data protection and cybersecurity risks.
In addition, we consult with outside advisors and experts, when appropriate, to assist with assessing identifying and managing cybersecurity risks, including to anticipate future threats and trends, and their impact on the Company’s risk environment. Due to evolving cybersecurity threats, it has and will continue to be difficult to prevent, detect, mitigate, and remediate cyber incidents.
In addition, we consult with outside advisors and experts, when appropriate, to assist with assessing, identifying, and managing cybersecurity risks, including to anticipate future threats and trends, and their impact on the Company’s risk environment. Cybersecurity threats continue to evolve. We consider cybersecurity threats along with other significant risks that we face within our overall enterprise risk management framework.
Our IT leadership also works closely with our legal team to oversee compliance with legal, regulatory and contractual security requirements. Our Vice President of Security and Compliance, who has cybersecurity knowledge and skills gained from work experience at the Company, heads the team responsible for implementing, monitoring and maintaining cybersecurity and data protection practices across our business.
Our IT leadership also works closely with our legal team to oversee compliance with legal, regulatory and contractual security requirements. Our CIO, Vice President of Infrastructure and Security, IT Security Director, and cybersecurity engineers have knowledge and experience to effectively implement, monitor, and maintain our cybersecurity posture.
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We consider cybersecurity threats, along with other significant risks that we face within our overall enterprise risk management framework.
Added
This includes recent developments, evolving standards, vulnerability assessments, third-party and independent reviews, the threat environment, compliance, privacy, technological trends and information security considerations arising with respect to the Company’s peers and third parties. The audit committee also reports to the board of directors at least annually on cybersecurity matters.
Added
For example, we regularly conduct penetration and vulnerability testing, security audits, and tabletop exercises. We conduct regular employee training on cybersecurity and provide management reports to monitor training effectiveness.
Added
However, cybersecurity attack techniques change frequently, and with increased volume and sophistication of such attacks, there can be no guarantee that we will not be the subject of future successful attacks, threats or incidents that could materially affect us.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeOur current physical network of locations is summarized in the chart below: State Number of Locations Alabama 8 Arizona 98 Arkansas 3 California 171 Colorado 4 Connecticut 16 Delaware 4 Florida 94 Georgia 34 Illinois 10 Indiana 11 Iowa 1 Kansas 6 Kentucky 6 Louisiana 17 Maryland 11 Massachusetts 11 Michigan 6 Mississippi 4 Missouri 13 Nebraska 2 Nevada 28 New Hampshire 3 New Jersey 34 New Mexico 3 New York 35 North Carolina 14 Ohio 17 Oklahoma 22 Oregon 8 Pennsylvania 46 Rhode Island 2 South Carolina 9 Tennessee 13 Texas 222 Utah 3 Virginia 18 Washington 12 Wisconsin 2 Total Locations 1,021 Our corporate offices are located in Phoenix, Arizona.
Biggest changeOur current physical network of store locations is summarized in the chart below: State Number of Locations Alabama 8 Arizona 97 Arkansas 3 California 172 Colorado 4 Connecticut 16 Delaware 4 Florida 92 Georgia 34 Illinois 10 Indiana 11 Iowa 1 Kansas 6 Kentucky 6 Louisiana 17 Maryland 11 Massachusetts 11 Michigan 6 Mississippi 4 Missouri 13 Nebraska 2 Nevada 29 New Hampshire 3 New Jersey 34 New Mexico 3 New York 36 North Carolina 14 Ohio 17 Oklahoma 22 Oregon 8 Pennsylvania 46 Rhode Island 2 South Carolina 9 Tennessee 13 Texas 223 Utah 3 Virginia 18 Washington 12 Wisconsin 2 Total Locations 1,022 Our corporate offices are located in Phoenix, Arizona.
The 92,669 square foot office building has a current lease term through February 28, 2027, with our ability to exercise two five-year renewal options. 30 Table of Contents
The 92,669 square foot office building has a current lease term through February 28, 2027, with our ability to exercise two five-year renewal options. 31 Table of Contents
Item 2. Properties Properties As of September 28, 2024 we had over 1,000 locations in 39 states, two manufacturing facilities, and six distribution centers supporting our residential locations. In addition, we contract with third-party logistic providers under short-term agreements for additional capacity as needed.
Item 2. Properties. Properties As of October 4, 2025 we had over 1,000 locations in 39 states, two manufacturing facilities, and six distribution centers supporting our residential locations. In addition, we contract with third-party logistic providers under short-term agreements for additional capacity as needed.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeThe parties in both the Arizona and Delaware derivative actions have filed stipulations to stay the actions pending resolution of the securities class action. Due to the early stage of these proceedings, we cannot reasonably estimate the potential range of loss, if any. We dispute the allegations of wrongdoing and intend to defend ourselves vigorously in these matters.
Biggest changeDue to the early stage of these proceedings, we cannot reasonably estimate the potential range of loss, if any. We dispute the allegations of wrongdoing and intend to defend ourselves vigorously in these matters. We are subject to other litigation, claims, and other proceedings that arise from time-to-time in the ordinary course of business.
Due to the early stage of this proceeding, we cannot reasonably estimate the potential range of loss, if any. We dispute the allegations of wrongdoing and intend to defend ourselves vigorously in this matter. On March 13, 2024 and March 14, 2024, derivative actions were separately filed in the U.S.
Due to the early stage of this proceeding, we cannot reasonably estimate the potential range of loss, if any. We dispute the allegations of wrongdoing and intend to defend ourselves vigorously in this matter. On March 13, 2024, March 14, 2024, and December 17, 2024, three derivative actions were separately filed in the U.S.
Both complaints include substantially the same allegations as those in the securities class action, and allege that the defendant directors and officers harmed the Company by either making false or misleading statements, or allowing false or misleading statements to be made. The complaints seek the award of damages, costs and attorneys’ fees, and other declaratory relief.
Each of the three complaints include allegations similar to those in the securities class action, and allege that the defendant directors and officers harmed the Company by either making false or misleading statements, or allowing false or misleading statements to be made. The complaints seek the award of damages, costs, attorneys’ fees, and other declaratory relief.
Not applicable. 31 Table of Contents PART II
Not applicable. 32 Table of Contents PART II
The amended and consolidated complaint alleges that we violated federal securities laws by issuing materially false and misleading statements that failed to disclose adverse facts about our financial guidance, business operations and prospects, and seeks class certification, damages, interest, attorneys’ fees, and other relief.
The complaint alleges that the defendants violated federal securities laws by issuing materially false and misleading statements that failed to disclose adverse facts about our financial guidance, business operations and prospects, and seeks class certification, damages, interest, attorneys’ fees, and other relief. On April 22, 2024, the defendants filed a motion to dismiss the complaint.
District Court for the District of Arizona and Delaware by John Clemens and Sally Flynn, respectively, on behalf of the Company, against our officers and directors.
District Courts for the Districts of Arizona and Delaware by John Clemens, Sally Flynn, and Ian Mednick, respectively, on behalf of the Company, and against its current and former officers and directors.
We are subject to other litigation, claims, and other proceedings that arise from time-to-time in the ordinary course of business. We believe these actions are routine and incidental to the business. As of September 28, 2024, we had established reserves for claims that are probable and estimable and such reserves were not significant.
We believe these actions are routine and incidental to the business. As of October 4, 2025, we had established reserves for claims that are probable and estimable and such reserves were not significant.
Removed
On December 1, 2023, the court appointed a lead plaintiff, and on February 20, 2024, the lead plaintiff filed an amended and consolidated complaint.
Added
That court granted that motion and dismissed the claims on July 14, 2025. The court allowed the plaintiff to file a second amended complaint. On August 13, 2025, the plaintiff filed the second amended complaint. On September 12, 2025, the defendants filed a motion to dismiss the second amended complaint. That motion is fully briefed and pending before the court.
Added
The two derivative actions pending in the U.S. District Court for the District of Arizona have been consolidated into a single proceeding. All of the derivative actions are stayed pending a decision on the motion to dismiss in the securities class action.

Item 4. Mine Safety Disclosures

Mine Safety Disclosures — required of mining issuers

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Biggest changeItem 4. Mine Safety Disclosures 31 PART II Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities 32 Item 6. [Reserved] 33 Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations 34 Item 7A. Quantitative and Qualitative Disclosures About Market Risk 45 Item 8.
Biggest changeItem 4. Mine Safety Disclosures 32 PART II Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities 33 Item 6. [Reserved] 34 Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations 35 Item 7A. Quantitative and Qualitative Disclosures About Market Risk 47 Item 8.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeThe graph uses the closing market price on October 29, 2020 of $21.70 per share as the initial value of our common stock.
Biggest changeThe graph uses the closing market price on October 29, 2020 of $434.00 per share (as adjusted for the Reverse Stock Split) as the initial value of our common stock.
We are not obligated to pay dividends on our common stock. 32 Table of Contents Recent Sales of Unregistered Securities None.
We are not obligated to pay dividends on our common stock. 33 Table of Contents Recent Sales of Unregistered Securities None.
The graph assumes $100 was invested at the market close on October 29, 2020, which was the first day our common stock began trading and its relative performance is tracked through September 28, 2024. Data for the Nasdaq Global Composite Index, and S&P SmallCap 600 Index assume reinvestment of dividends.
The graph assumes $100 was invested at the market close on October 29, 2020, which was the first day our common stock began trading and its relative performance is tracked through October 4, 2025. Data for the Nasdaq Global Composite Index, and S&P SmallCap 600 Index assume reinvestment of dividends.
As of November 26, 2024, there were three stockholders of record, although there is a much larger number of beneficial holders. The actual number of stockholders is greater than the number of record holders stated above, and includes stockholders who are beneficial owners, but whose shares are held in “street name” by brokers and other nominees.
As of December 5, 2025, there were two stockholders of record, although there is a much larger number of beneficial holders. The actual number of stockholders is greater than the number of record holders stated above, and includes stockholders who are beneficial owners, but whose shares are held in “street name” by brokers and other nominees.
Removed
Repurchase of Equity Securities On December 3, 2021, the board of directors authorized a share repurchase program for up to an aggregate of $300 million of the Company’s outstanding shares of common stock over a period of three years, expiring December 31, 2024.
Removed
During the year ended September 28, 2024, there were no repurchases under our program and as of September 28, 2024, approximately $147.7 million remained available for future purchases under our share repurchase program.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeThe 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): Year Ended Statements of Operations Data: September 28, 2024 September 30, 2023 October 1, 2022 Sales $ 1,330,121 $ 1,451,209 $ 1,562,120 Cost of merchandise and services sold 853,331 902,986 888,379 Gross profit 476,790 548,223 673,741 Selling, general and administrative expenses 419,673 446,044 434,987 Operating income 57,117 102,179 238,754 Other expense: Interest expense 70,395 65,438 30,240 Other expenses, net — — 397 Total other expense 70,395 65,438 30,637 (Loss) income before taxes (13,278 ) 36,741 208,117 Income tax (benefit) expense 10,101 9,499 49,088 Net (loss) income $ (23,379 ) $ 27,242 $ 159,029 Earnings per share Basic $ (0.13 ) $ 0.15 $ 0.86 Diluted $ (0.13 ) $ 0.15 $ 0.85 Weighted average shares outstanding Basic 184,694 183,839 184,347 Diluted 184,694 184,716 186,148 Percentage of Sales (1) (%) (%) (%) Sales 100.0 100.0 100.0 Cost of merchandise and services sold 64.2 62.2 56.9 Gross margin 35.8 37.8 43.1 Selling, general and administrative expenses 31.6 30.7 28.7 Operating income 4.3 7.0 15.3 Other expense: Interest expense 5.3 4.5 1.9 Other expenses, net — - 0.1 Total other expense 5.3 4.5 2.0 Income before taxes (1.0 ) 2.5 13.3 Income tax (benefit) expense 0.8 0.7 3.1 Net (loss) income (1.8 ) 1.9 10.2 Other Financial and Operations Data: Number of new and acquired locations, net 13 18 38 Number of locations open at end of period 1,021 1,008 990 Comparable sales growth (2) (8.8 )% (11.0 )% 1.6 % Adjusted EBITDA (3) $ 108,744 $ 168,149 $ 292,276 Adjusted EBITDA as a percentage of sales (3) 8.2 % 11.6 % 18.7 % Adjusted net (loss) income (3) $ (1,085 ) $ 51,113 $ 176,391 Adjusted diluted earnings per share $ (0.01 ) $ 0.28 $ 0.95 (1) Components may not add to totals due to rounding.
Biggest changeThe following table summarizes key components of our results of operations for the years indicated, both in dollars and as a percentage of our sales (in thousands, except per share amounts and percentages): Year Ended Statements of Operations Data: October 4, 2025 September 28, 2024 September 30, 2023 Sales $ 1,241,915 $ 1,330,121 $ 1,451,209 Cost of merchandise and services sold 802,268 853,331 902,986 Gross profit 439,647 476,790 548,223 Selling, general and administrative expenses 425,676 419,673 446,044 Impairment 183,826 — — Operating (loss) income (169,855 ) 57,117 102,179 Interest expense 62,919 70,395 65,438 (Loss) income before taxes (232,774 ) (13,278 ) 36,741 Income tax expense 4,196 10,101 9,499 Net (loss) income $ (236,970 ) $ (23,379 ) $ 27,242 (Loss) earnings per share Basic $ (25.57 ) $ (2.53 ) $ 2.96 Diluted $ (25.57 ) $ (2.53 ) $ 2.95 Weighted average shares outstanding Basic 9,268 9,234 9,191 Diluted 9,268 9,234 9,234 Percentage of Sales (1) (%) (%) (%) Sales 100.0 100.0 100.0 Cost of merchandise and services sold 64.6 64.2 62.2 Gross margin 35.4 35.8 37.8 Selling, general and administrative expenses 34.3 31.6 30.7 Impairment 14.8 — — Operating (loss) income (13.7 ) 4.3 7.0 Interest expense 5.1 5.3 4.5 (Loss) income before taxes (18.7 ) (1.0 ) 2.5 Income tax expense 0.3 0.8 0.7 Net (loss) income (19.1 ) (1.8 ) 1.9 Other Financial and Operations Data: Number of new and acquired locations, net 1 13 18 Number of locations open at end of year 1,022 1,021 1,008 Comparable sales growth (2) (6.8 )% (8.8 )% (11.0 )% Adjusted EBITDA (3) $ 61,356 $ 108,744 $ 168,149 Adjusted EBITDA as a percentage of sales (3) 4.9 % 8.2 % 11.6 % Adjusted net (loss) income (3) $ (43,664 ) $ (1,085 ) $ 51,113 Adjusted diluted (loss) earnings per share $ (4.71 ) $ (0.12 ) $ 5.54 (1) Components may not add to totals due to rounding.
Sales are impacted by weather, seasonality, product mix and availability, as well as 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.
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.
Adjusted net income (loss) and Adjusted diluted earnings 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.
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.
Adjusted diluted earnings per share is defined as Adjusted net income (loss) divided by the diluted weighted average number of common shares outstanding.
Adjusted diluted earnings (loss) per share is defined as Adjusted net income (loss) divided by the diluted weighted average number of common shares outstanding.
We do not believe there is a reasonable likelihood there will be a material change in the future estimates or assumptions we use to calculate our reduction of inventory. Inventories Inventories are stated at the lower of cost or market or net realizable value.
We do not believe there is a reasonable likelihood there will be a material change in the future estimates or assumptions we use to calculate our reduction of inventory. Inventories Inventories are stated at the lower of cost or net realizable value.
We value inventory using the average cost method which includes costs incurred to deliver inventory to our distribution centers including trasportation, warehousing and distribution costs. We evaluate inventory for excess and obsolescence and record necessary reserves. We provide provisions for losses related to inventories based on management’s judgment regarding historical purchase cost, selling price, margin, and current business trends.
We value inventory using the average cost method which includes costs incurred to deliver inventory to our distribution centers including transportation, warehousing and distribution costs. We evaluate inventory for excess and obsolescence and record necessary reserves. We provide provisions for losses related to inventories based on management’s judgment regarding historical purchase cost, selling price, margin, and current business trends.
These costs are significant and are expected to continue to increase proportionate to our growth. Gross margin is gross profit as a percentage of our sales. Gross margin is impacted by merchandise costs, pricing and promotions, product mix and availability, inflation, and service costs, which can vary.
These costs are significant and are expected to continue to increase proportionate to our growth. 36 Table of Contents Gross margin is gross profit as a percentage of our sales. Gross margin is impacted by merchandise costs, pricing and promotions, product mix and availability, inflation, and service costs, which can vary.
These items are reported in SG&A in our consolidated statements of operations. (4) Includes certain senior executive transition costs and severance associated with completed corporate restructuring activities across the organization, losses (gains) on asset dispositions, merger and acquisition costs, and other non-recurring, non-cash, or discrete items as determined by management.
These items are reported in SG&A in our consolidated statements of operations. (5) Includes certain senior executive transition costs and severance associated with completed corporate restructuring activities across the organization, losses on asset dispositions, merger and acquisition costs, and other non-recurring, non-cash, or discrete items as determined by management. Amounts are reported in SG&A in our consolidated statements of operations.
Significant disruption to our supply chain for products we sell, as a result of geopolitical conflict or otherwise, can also have a material impact on our sales and earnings and cause unpredictable changes in results.
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.
Our offering of proprietary, owned, and third-party brands across diverse product categories drives sales growth by attracting new consumers 34 Table of Contents and encouraging repeat visits from our existing consumers.
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.
In addition, we believe adverse macroeconomic trends and uncertainties including inflation 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. An additional uncertainty that can impact our results of operations is consumer purchasing patterns.
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. Additional uncertainties that can impact our results of operations are consumer purchasing patterns and consumer cost-consciousness.
(3) Represents non-recurring costs, such as third-party consulting costs related to first-generation technology initiatives, replacement of systems that have been no longer supported by our vendors, investment in and development of new products outside of the course of continuing operations, or other discrete strategic projects that are infrequent or unusual in nature and potentially distortive to continuing operations.
(4) Represents non-recurring costs, such as third-party consulting costs related to first-generation technology initiatives, replacements of systems that are no longer supported by our vendors, investment in and development of new products outside of the course of continuing operations, or other discrete strategic projects that are infrequent or unusual in nature and potentially distortive to continuing operations.
Actual results or outcomes may differ materially from those anticipated in these forward-looking statements, which are subject to risks, uncertainties, and other factors, including those described in Part I, Item 1A, “Risk Factors” of this Annual Report on Form 10-K for the fiscal year ended September 28, 2024.
Actual results or outcomes may differ materially from those anticipated in these forward-looking statements, which are subject to risks, uncertainties, and other factors, including those described in Part I, Item 1A, “Risk Factors” of this Annual Report on Form 10-K for the fiscal year ended October 4, 2025.
The decrease in gross margin was primarily driven by negative impacts of 121 basis points product rate, 94 basis points from deleverage on occupancy costs and 50 basis points from the expensing of previously capitalized distribution center costs due to significant reductions in inventory during the current year period.
The decrease in gross margin was primarily driven by negative impacts of 121 basis points from product rate, 94 basis points from deleverage on occupancy costs and 50 basis points from the expensing of previously capitalized distribution center costs due to significant reductions in inventory during fiscal 2024.
The number of new locations reflects the number of locations opened during a particular reporting period. New locations require an initial capital investment in location buildouts, fixtures, and equipment, which we amortize over time as well as cash required for inventory. As of September 28, 2024, we operated over 1,000 locations in 39 states across the United States.
The number of new locations reflects the number of locations opened during a particular reporting period. New locations require an initial capital investment in location buildouts, fixtures, and equipment, which we amortize over time as well as cash required for inventory. As of October 4, 2025, we operated over 1,000 locations in 39 states across the United States.
We are obligated to make cash payments in connection with various lease obligations and purchase commitments and all obligations require cash payments to be made by us over varying periods of time.
(4) Financing lease obligations relate to equipment leases. We are obligated to make cash payments in connection with various lease obligations and purchase commitments and all obligations require cash payments to be made by us over varying periods of time.
We offer complimentary, commercial-grade in-store water testing and analysis via our proprietary AccuBlue ® system, which increases consumer engagement, conversion, basket size, and loyalty, resulting in higher lifetime value.
We offer complimentary, commercial-grade in-store water testing and analysis via our proprietary AccuBlue ® system, leading to increased consumer engagement, conversion, basket size, and loyalty, resulting in higher lifetime value.
Our dedicated team of associates, pool and spa care experts, and experienced service technicians are passionate about empowering our consumers with the knowledge, products, and solutions necessary to confidently maintain and enjoy their pools and spas.
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 change in income tax expense was the result of the impact of limitations on interest expense deductibility requiring us to record a $11.2 million non-cash valuation allowance against our deferred tax asset, offset by pretax loss in 2024, compared to pretax income in 2023. Our effective tax rate was -76.1% for fiscal 2024 compared to 25.9% for fiscal 2023.
The change in income tax expense was the result of the impact of limitations on interest expense deductibility requiring us to record a $11.2 million non-cash valuation allowance against our deferred tax asset, partially offset by pretax loss in 2024, compared to pretax income in 2023.
Our water treatment expertise is powered by data and intelligence accumulated from the millions of water tests we have performed over the years, positioning us as the most trusted water treatment service provider in the industry. We have a legacy of leadership and disruptive innovation.
Our water treatment expertise is powered by data and intelligence accumulated from the millions of water tests we have performed over the years, positioning us as the most trusted water treatment service provider in the recreational pool and spa industry.
Adjusted net loss was $1.1 million in fiscal 2024 compared to income of $51.1 million in fiscal 2023, a change of $52.2 million. Adjusted diluted earnings per share decreased to $(0.01) in fiscal 2024 compared to $0.28 in fiscal 2023.
Diluted earnings per share decreased to $(2.53) in fiscal 2024 compared to $2.95 in fiscal 2023. Adjusted net loss was $1.1 million in fiscal 2024 compared to income of $51.1 million in fiscal 2023, a change of $52.2 million. Adjusted diluted earnings per share decreased to $(0.12) in fiscal 2024 compared to $5.54 in fiscal 2023.
Adjusted EBITDA Adjusted EBITDA decreased to $108.7 million in fiscal 2024 compared to $168.1 million in fiscal 2023, a decrease of $59.4 million. The decrease was primarily driven by lower sales volume during the period, combined with decreases in product rate and occupancy deleverage. These were partially offset by lower SG&A and inventory adjustments .
Adjusted EBITDA Adjusted EBITDA decreased to $108.7 million in fiscal 2024 compared to $168.1 million in fiscal 2023, a decrease of $59.4 million. The decrease was primarily driven by lower sales volume during fiscal 2024, combined with decreases in gross margin, driven by higher product rate and occupancy deleverage.
Comparable sales decreased $127.4 million, or 8.8%, compared to fiscal 2023, primarily driven by declines in traffic and average order value. Non-comparable sales including acquisitions and new stores were $7.9 million. Gross Profit and Gross Margin Gross profit decreased to $476.8 million in fiscal 2024 compared to $548.2 million in fiscal 2023, a decrease of $71.4 million or 13.0%.
Comparable sales decreased $127.4 million, or 8.8%, compared to fiscal 2023, Non-comparable sales including acquisitions and new stores were $7.9 million in fiscal 2024. 42 Table of Contents Gross Profit and Gross Margin Gross profit decreased to $476.8 million in fiscal 2024 compared to $548.2 million in fiscal 2023, a decrease of $71.4 million or 13.0%.
References to fiscal 2024, 2023, and 2022 refer to the fiscal years ended September 28, 2024, September 30, 2023, and October 1, 2022, respectively. Fiscal 2024, 2023, and 2022 included 52 weeks of operations.
References to fiscal 2025, 2024, and 2023 refer to the fiscal years ended October 4, 2025, September 28, 2024, and September 30, 2023. Fiscal 2025 included 53 weeks of operations and 2024 and 2023, included 52 weeks of operations.
This increase was primarily driven by changes in working capital related to reductions in inventories of $85.9 million, increases in accounts payable and accrued expenses of $6.7 million, partially offset by an increase in accounts receivable of $18.7 million. Net cash provided by operating activities was $6.5 million in fiscal 2023 compared to $66.6 million in fiscal 2022.
This increase was primarily driven by changes in working capital related to reductions in inventories of $85.9 million, increases in accounts payable and accrued expenses of $6.7 million, partially offset by an increase in accounts receivable of $18.7 million.
Summary of Cash Flows A summary of our cash flows from operating, investing, and financing activities is presented in the following table (in thousands): Year Ended September 28, 2024 September 30, 2023 October 1, 2022 Net cash provided by operating activities $ 107,466 $ 6,470 $ 66,644 Net cash used in investing activities (47,163 ) (52,539 ) (138,981 ) Net cash used in financing activities (7,218 ) (10,804 ) (158,868 ) Net increase (decrease) in cash and cash equivalents $ 53,085 $ (56,873 ) $ (231,205 ) 42 Table of Contents Cash Provided by Operating Activities Net cash provided by operating activities was $107.5 million in fiscal 2024 compared to $6.5 million in fiscal 2023.
Summary of Cash Flows A summary of our cash flows from operating, investing, and financing activities is presented in the following table (in thousands): Year Ended October 4, 2025 September 28, 2024 September 30, 2023 Net cash provided by operating activities $ 8,822 $ 107,466 $ 6,470 Net cash used in investing activities (25,350 ) (47,163 ) (52,539 ) Net cash used in financing activities (27,637 ) (7,218 ) (10,804 ) Net (decrease) increase in cash and cash equivalents $ (44,165 ) $ 53,085 $ (56,873 ) 44 Table of Contents Cash Provided by Operating Activities Net cash provided by operating activities was $8.8 million in fiscal 2025 compared to $107.5 million in fiscal 2024.
Due to the highly unstable supply of granular chlorine compounds over the last three years, we believe some customers stockpiled chemicals, resulting in unexpected changes in demand. As a result of such behavior, our revenue may be higher than normal during the periods of stockpiling and may be lower than normal during the periods after stockpiling has occurred.
In the past, we believe some customers stockpiled chemicals, resulting in unexpected changes in demand. As a result of such behavior, our revenue may be higher than normal during the periods of stockpiling and may be lower than normal during the periods after stockpiling has occurred.
This decrease was primarily driven by lower payments of employee tax withholding related to restricted stock vesting. Net cash used in financing activities was $10.8 million in fiscal 2023 compared to $158.9 million in fiscal 2022. This decrease was primarily driven by repurchases and retirement of common stock that occurred in fiscal 2022.
Net cash used in financing activities was $7.2 million in fiscal 2024 compared to $10.8 million in fiscal 2023. This decrease was primarily driven by lower payments of employee tax withholding related to restricted stock vesting.
In addition, unseasonably early or late warming trends 41 Table of Contents 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.
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.
The components of our cost of merchandise and services sold may not be comparable to the components of cost of sales or similar measures of other companies.
The components of our cost of merchandise and services sold may not be comparable to the components of cost of sales or similar measures of other companies. As a result, our gross profit and gross margin may not be comparable to similar data made available by other companies.
Factors Affecting the Comparability of our Results of Operations Our reported results have been affected by, among other events, the following events, which must be understood in order to assess the comparability of our period-to-period financial performance and condition. 36 Table of Contents Impact of Macroeconomic Events and Uncertainties 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, supply chain disruptions, labor market constraints, high rates of inflation, rising interest rates, general economic slowdown, and potential failures among financial institutions.
Impact of Macroeconomic Events and Uncertainties 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.
We use Adjusted EBITDA to supplement GAAP measures of performance to evaluate the effectiveness of our business strategies, to make budgeting decisions, and to compare our performance against that of other companies using similar measures.
Adjusted EBITDA is also frequently used by analysts, investors, and other interested parties to evaluate companies in our industry, when considered alongside other GAAP measures. We use Adjusted EBITDA to supplement GAAP measures of performance to evaluate the effectiveness of our business strategies, to make budgeting decisions, and to compare our performance against that of other companies using similar measures.
Net (Loss) Income and Diluted Earnings per Share Net loss was $23.4 million in fiscal 2024 compared to net income of $27.2 million in fiscal 2023, a change of $50.6 million. Diluted earnings per share decreased to $(0.13) in fiscal 2024 compared to $0.15 in fiscal 2023.
Our effective tax rate was -76.1% for fiscal 2024 compared to 25.9% for fiscal 2023. Net (Loss) Income and Diluted Earnings per Share Net loss was $23.4 million in fiscal 2024 compared to net income of $27.2 million in fiscal 2023, a change of $50.6 million.
(2) Represents charges related to equity-based compensation and our related payroll tax expense, which are reported in SG&A in our consolidated statements of operations.
(2) Includes depreciation related to our distribution centers and store locations, which is reported in cost of merchandise and services sold and SG&A in our consolidated statements of operations. (3) Represents charges related to equity-based compensation and our related payroll tax expense, which are reported in SG&A in our consolidated statements of operations.
Historically, we have funded working capital requirements, capital expenditures, payments related to acquisitions, debt service requirements, and repurchases of shares of our common stock with internally generated cash on hand and through our Revolving Credit Facility. Cash and cash equivalents consist primarily of cash on deposit with banks.
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. Cash and cash equivalents consist primarily of cash on deposit with banks. Cash and cash equivalents totaled $64.3 million and $108.5 million as of October 4, 2025 and September 28, 2024.
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.
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. 43 Table of Contents 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.
This decrease was primarily driven by lower net income in fiscal 2023. Cash Used in Investing Activities Net cash used in investing activities was $47.2 million in fiscal 2024 compared to $52.5 million in fiscal 2023. This decrease was driven by lower investments for business acquisitions, partially offset by increased purchases of property and equipment.
Cash Used in Investing Activities Net cash used in investing activities was $25.4 million in fiscal 2025 compared to $47.2 million in fiscal 2024. This decrease was driven by a decrease in purchases of property and equipment. Net cash used in investing activities was $47.2 million in fiscal 2024 compared to $52.5 million in fiscal 2023.
Certain leases are renewable at our option typically for periods of five or more years and some require payments upon early termination. 43 Table of Contents Critical Accounting Estimates The preparation of our consolidated financial statements in accordance with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosures of contingent assets and liabilities at the date of the financial statements, and the reported amounts of sales and expenses during the reported periods.
Certain leases have purchase option at the conclusion of the lease agreement. 45 Table of Contents Critical Accounting Estimates The preparation of our consolidated financial statements in accordance with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosures of contingent assets and liabilities at the date of the financial statements, and the reported amounts of sales and expenses during the reported periods.
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 every pool and spa in the continental United States.
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. We operate primarily in the pool and spa aftermarket industry, a fundamentally attractive category in retail, given its scale, historical predictability, and growth outlook.
We use operating income (loss) as an indicator of the productivity of our business and our ability to manage expenses.
Operating income (loss) excludes interest expense, loss on debt extinguishment, income tax expense (benefit), and other (income) expenses, net. We use operating income (loss) as an indicator of the productivity of our business and our ability to manage expenses.
These differentiated capabilities allow us to meet the needs of any pool and spa owner, whether they care for their pool or spa themselves or rely on a professional, whenever, wherever, and however they choose to engage with us.
These differentiated capabilities allow us to meet the needs of any pool and spa owner, whether they care for their pool or spa themselves or rely on a professional, whenever, wherever, and however they choose to engage with us. 35 Table of Contents Key Factors and Measures We Use to Evaluate Our Business We consider a variety of financial and operating measures in assessing the performance of our business.
Adjusted EBITDA Adjusted EBITDA is defined as earnings before interest (including amortization of debt issuance costs), taxes, depreciation and amortization, management fees, equity-based compensation expense, loss (gain) on debt extinguishment, loss (gain) on asset and contract dispositions, executive transition costs, severance, costs related to equity offerings, strategic project costs, merger and acquisition costs, and other non-recurring, non-cash or discrete items.
Adjusted EBITDA Adjusted EBITDA is defined as earnings before interest (including amortization of debt issuance costs), taxes, depreciation and amortization, 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 EBITDA is a key measure used by management and our board of directors to assess our financial performance.
Selling and operating expenses at retail locations include payroll, bonus and benefit costs for personnel, supplies, and credit and debit card processing costs.
Selling, General and Administrative Expenses Our SG&A includes selling and operating expenses across our retail locations and digital platform, and our corporate-level general and administrative expenses. Selling and operating expenses at retail locations include payroll, bonus and benefit costs for personnel, supplies, and credit and debit card processing costs.
We offer an extensive assortment of professional-grade products, the majority of which are exclusive to Leslie’s, as well as certified installation and repair services, all of which are essential to the ongoing maintenance of pools and spas.
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.
Adjusted net income (loss) is defined as net income (loss) adjusted to exclude management fees, equity-based compensation expense, loss (gain) on debt extinguishment, loss (gain) on asset and contract dispositions, executive transition costs, severance, costs related to equity offerings, strategic project costs, merger and acquisition costs, and other non-recurring, non-cash, or discrete items.
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, change in valuation allowance for deferred taxes, and other non-recurring, non-cash, or discrete items.
(2) See the section titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Key Factors and Measures We Use to Evaluate Our Business.” (3) The tables below provide a reconciliation from our net (loss) income to Adjusted EBITDA and net (loss) income to Adjusted net income for fiscal 2024, 2023, and 2022 (in thousands). 38 Table of Contents Year Ended September 28, 2024 September 30, 2023 October 1, 2022 Net (loss) income $ (23,379 ) $ 27,242 $ 159,029 Interest expense 70,395 65,438 30,240 Income tax expense 10,101 9,499 49,088 Depreciation and amortization expense (1) 33,078 34,142 30,769 Equity-based compensation expense (2) 8,650 12,067 11,922 Strategic project costs (3) 2,083 3,004 4,960 Executive transition costs and other (4) 7,816 16,757 6,268 Adjusted EBITDA $ 108,744 $ 168,149 $ 292,276 Year Ended September 28, 2024 September 30, 2023 October 1, 2022 Net (loss) income $ (23,379 ) $ 27,242 $ 159,029 Equity-based compensation expense (2) 8,650 12,067 11,922 Strategic project costs (3) 2,083 3,004 4,960 Executive transition costs and other (4) 7,816 16,757 6,268 Changes in valuation allowance (5) 11,177 — — Tax effects of these adjustments (6) (7,432 ) (7,957 ) (5,788 ) Adjusted net (loss) income $ (1,085 ) $ 51,113 $ 176,391 (1) Includes depreciation related to our distribution centers and store locations, which is reported in cost of merchandise and services sold and selling, general and administrative in our consolidated statements of operations.
(2) See the section titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Key Factors and Measures We Use to Evaluate Our Business.” (3) The tables below provide a reconciliation from our net (loss) income to Adjusted EBITDA and net (loss) income to Adjusted net (loss) income for fiscal 2025, 2024, and 2023 (in thousands). 40 Table of Contents Year Ended October 4, 2025 September 28, 2024 September 30, 2023 Net (loss) income $ (236,970 ) $ (23,379 ) $ 27,242 Interest expense 62,919 70,395 65,438 Income tax expense 4,196 10,101 9,499 Impairment (1) 183,826 — — Depreciation and amortization expense (2) 33,467 33,078 34,142 Equity-based compensation expense (3) 6,254 8,650 12,067 Strategic project costs (4) 2,614 2,083 3,004 Executive transition costs and other (5) 5,050 7,816 16,757 Adjusted EBITDA $ 61,356 $ 108,744 $ 168,149 Year Ended October 4, 2025 September 28, 2024 September 30, 2023 Net (loss) income $ (236,970 ) $ (23,379 ) $ 27,242 Impairment (1) 183,826 — — Equity-based compensation expense (3) 6,254 8,650 12,067 Strategic project costs (4) 2,614 2,083 3,004 Executive transition costs and other (5) 5,050 7,816 16,757 Changes in valuation allowance (6) 44,998 11,177 — Tax effects of these adjustments (7) (49,436 ) (7,432 ) (7,957 ) Adjusted net (loss) income $ (43,664 ) $ (1,085 ) $ 51,113 (1) Represents non-cash charges related to the write-off of our goodwill given recent operating and market capitalization declines and asset write offs for certain underperforming stores.
We have a long track record of investing in our business throughout the year, including in operating expenses, working capital, and capital expenditures related to new locations and other growth initiatives.
Sales are substantially lower during our first and second fiscal quarters when we typically generate net losses and we realize negative operating cash flows. We have a long track record of investing in our business throughout the year, including in operating expenses, working capital, and capital expenditures related to new locations and other growth initiatives.
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 per share.
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 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 per share.
We do not believe there is a reasonable likelihood that there will be a material change in the future estimates or assumptions used to calculate our inventory reserve. Business Combinations We account for business combinations using the acquisition method of accounting.
We do not believe there is a reasonable likelihood that there will be a material change in the future estimates or assumptions used to calculate our inventory reserve. Goodwill and Other Intangibles, Net Goodwill and intangible assets are recorded at their estimated fair values at the date of acquisition.
Adjusted Net Income (Loss) and Adjusted Diluted Earnings per Share Adjusted net income (loss) and Adjusted diluted earnings per share are additional key measures used by management and our board of directors to assess our financial performance.
Our presentation of Adjusted EBITDA should not be construed as an inference that our future results will be unaffected by these items. 37 Table of Contents Adjusted Net Income (Loss) and Adjusted Diluted Earnings (loss) per Share 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.
Comparison of Fiscal 2023 and 2022 Sales Sales decreased to $1,451.2 million in fiscal 2023 from $1,562.1 million in fiscal 2022, a decrease of $110.9 million or 7.1%. Comparable sales decreased $170.5 million, or 11%, compared to fiscal 2022, primarily driven by traffic declines.
Comparison of Fiscal 2024 and 2023 Sales Sales decreased to $1,330.1 million in fiscal 2024 compared to $1,451.2 million in fiscal 2023, a decrease of $121.1 million, or 8.3%, primarily driven by declines in traffic and average order value.
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.
Our working capital requirements fluctuate during the year, driven primarily by seasonality and the timing of inventory purchases. 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.
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.
In the future, we may incur expenses or charges such as those added back to calculate Adjusted EBITDA.
Amounts are reported in SG&A in our consolidated statements of operations. (5) Represents a non-cash change in valuation allowance for deferred taxes that management does not believe are indicative of our ongoing operations. This item is reported in income tax (benefit) expense in our consolidated statements of operations and we note they may reoccur in the future.
(6) Represents a non-cash change in valuation allowance for deferred taxes. This item is reported in income tax benefit (expense) in our consolidated statements of operations. (7) 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.
Liquidity and Capital Resources Overview Our primary sources of liquidity are net cash provided by operating activities and borrowing availability under our Revolving Credit Facility.
During this year, we experienced unseasonably cold and rainy weather in the North East in May and June, which we believe delayed the start to the pool season and pool openings. Liquidity and Capital Resources Overview Our primary sources of liquidity are net cash provided by operating activities and borrowing availability under our Revolving Credit Facility.
Our Company We are the largest and most trusted direct-to-consumer brand in the $15 billion United States pool and spa care industry, serving residential and professional consumers.
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.
Gross margin decreased to 37.8% compared to 43.1% in fiscal 2022, a decrease of 530 basis points.
Gross Profit and Gross Margin Gross profit decreased to $439.6 million in fiscal 2025 compared to $476.8 million in fiscal 2024, a decrease of $37.1 million or 7.8%. Gross margin decreased to 35.4% compared to 35.8% in fiscal 2024, a decrease of 40 basis points.
As of September 28, 2024, outstanding standby letters of credit totaled $10.4 million, and after considering borrowing base restrictions, we had $239.6 million of available borrowing capacity under the terms of the Revolving Credit Facility. As of September 28, 2024, we were in compliance with the covenants under the Revolving Credit Facility and our Term Loan agreements.
As of October 4, 2025, outstanding standby letters of credit totaled $11.7 million, and after considering borrowing base restrictions we had $167.9 million of availability from cash on hand and available borrowing capacity under the terms of the Revolving Credit Facility.
Net cash used in investing activities was $52.5 million in fiscal 2023 compared to $139.0 million in fiscal 2022. This increase was primarily driven by higher investments for business acquisitions. Cash Used in Financing Activities Net cash used in financing activities was $7.2 million in fiscal 2024 compared to $10.8 million in fiscal 2023.
This decrease was driven by lower investments for business acquisitions, partially offset by increased purchases of property and equipment. Cash Used in Financing Activities Net cash used in financing activities was $27.6 million in fiscal 2025 compared to $7.2 million in fiscal 2024. This increase was primarily driven by higher repayments of long-term debt in fiscal 2025.
We do not believe there is a reasonable likelihood that there will be a material change in the future estimates or assumptions used to calculate the values of our acquired intangible assets contingent considerations liabilities. 44 Table of Contents Recent Accounting Pronouncements For information regarding recent accounting pronouncements, see Note 2—Summary of Significant Accounting Policies to our consolidated financial statements included elsewhere in this Annual Report on Form 10-K.
Recent Accounting Pronouncements For information regarding recent accounting pronouncements, see Note 2—Summary of Significant Accounting Policies to our consolidated financial statements included elsewhere in this Annual Report on Form 10-K.
Contractual Obligations and Other Commitments The following table summarizes our contractual cash obligations as of September 28, 2024 (in thousands): Payments Due By Period Total 2025 2026 2027 2028 2029 Thereafter Long-term debt, net (1) $ 783,675 $ 10,125 $ 8,100 $ 8,100 $ 757,350 $ — $ — Purchase commitments (2) 97,644 79,191 8,334 5,996 2,177 1,946 — Operating lease obligations (3) 331,784 78,328 83,619 61,402 39,471 24,282 44,682 Total $ 1,213,103 $ 167,644 $ 100,053 $ 75,498 $ 798,998 $ 26,228 $ 44,682 (1) We are required to pay a commitment fee of 0.25% based on the unused portion of the Revolving Credit Facility, which is not included in the table above due to the unknown nature of future borrowings.
Contractual Obligations and Other Commitments The following table summarizes our contractual cash obligations as of October 4, 2025 (in thousands): Payments Due By Period Total 2026 2027 2028 2029 2030 Thereafter Long-term debt, net (1) $ 756,650 $ — $ — $ 756,650 $ — $ — $ — Purchase commitments (2) 22,176 10,135 7,068 3,027 1,946 — — Operating lease obligations (3) 314,457 89,454 75,314 51,615 37,052 19,195 41,827 Financing lease obligations (4) 1,570 315 209 209 209 209 419 Total $ 1,094,853 $ 99,904 $ 82,591 $ 811,501 $ 39,207 $ 19,404 $ 42,246 (1) We are required to pay a commitment fee of 0.25% based on the unused portion of the Revolving Credit Facility, which is not included in the table above due to the unknown nature of future borrowings.
Sales and earnings are highest during the third and fourth fiscal quarters, which include April through September, and represent the peak months of swimming pool use. Sales are substantially lower during our first and second fiscal quarters when we typically generate net losses and we realize negative operating cash flows.
These decreases were partially offset by lower SG&A and inventory adjustments . Seasonality and Quarterly Fluctuations Our business is highly seasonal. Sales and earnings are highest during the third and fourth fiscal quarters, which include April through September, and represent the peak months of swimming pool use.
Our primary working capital requirements are for the purchase of inventory, payroll, rent, other facility costs, distribution costs, and general and administrative costs. Our working capital requirements fluctuate during the year, driven primarily by seasonality and the timing of inventory purchases.
As of October 4, 2025 and September 28, 2024, we did not have any outstanding borrowings under our Revolving Credit Facility. Our primary working capital requirements are for the purchase of inventory, payroll, rent, other facility costs, distribution costs, and general and administrative costs.
Our assortment includes chemicals, equipment and parts, cleaning and maintenance equipment, and safety, recreational, and fitness-related products. We also offer important essential services, such as equipment installation and repair for residential consumers and professional pool operators. Consumers receive the benefit of extended vendor warranties on purchased products from our locations and on installations or repairs from our certified in-field technicians.
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.
Income Taxes Income tax expense decreased to $9.5 million in fiscal 2023 compared to $49.1 million in fiscal 2022, a decrease of $39.6 million. The decrease was primarily attributable to lower pretax income. Our effective tax rate was 25.9% for fiscal 2023 compared to 23.6% for fiscal 2022.
Income Taxes Income tax expense was $4.2 million in fiscal 2025 compared to $10.1 million in fiscal 2024, a decrease of $5.9 million.
Interest Expense Interest expenses increased to a $65.4 million in fiscal 2023 from $30.2 million in fiscal 2022, an increase of $35.2 million. The increase in interest expense was primarily related to higher interest rates on our Term Loan and Revolving Credit Facility and increased borrowings on our Revolving Credit Facility.
Interest Expense Interest expense decreased to $62.9 million in fiscal 2025 compared to $70.4 million in fiscal 2024, a decrease of $7.5 million. This decrease was primarily due to lower interest rates on our Term Loan and Revolving Credit Facility combined with a lower balance on the Term Loan.
Business Acquisitions See Note 3—Business Combinations to our consolidated financial statements included elsewhere in this Annual Report on Form 10-K for information regarding our business acquisitions. 37 Table of Contents Results of Operations We derived our consolidated statements of operations for fiscal 2024, 2023, and 2022 from our consolidated financial statements.
We performed a quantitative assessment of goodwill during the fourth quarter of 2025 and recorded a $180.7 million impairment. See Note 3 - Goodwill and Other Intangibles, Net to our consolidated financial statements included elsewhere in this Annual Report on Form 46 Table of Contents 10-K for further discussion.
Adjusted net income decreased to $51.1 million in fiscal 2023 compared to $176.4 million in fiscal 2022, a decrease of $125.3 million. Adjusted diluted earnings per share decreased to $0.28 in fiscal 2023 compared to $0.95 in fiscal 2022.
Adjusted net loss was $43.7 million in fiscal 2025 compared to a loss of $1.1 million in fiscal 2024, a change of $42.6 million. Adjusted diluted loss per share was $(4.71) in fiscal 2025 compared to $(0.12) in fiscal 2024.
Non-comparable sales including acquisitions and new stores were $59.6 million compared to the prior year period. 40 Table of Contents Gross Profit and Gross Margin Gross profit decreased to $548.2 million in fiscal 2023 from $673.7 million in fiscal 2022, a decrease of $125.5 million or 18.6%.
Comparable sales decreased $91.4 41 Table of Contents million, or 6.8%, compared to fiscal 2024, primarily driven by declines in traffic and average order value. Non-comparable sales, including acquisitions and new stores, were $3.2 million in fiscal 2025.
The components of our SG&A may not be comparable to the components of similar measures of other companies. Operating Income (Loss) Operating income (loss) is gross profit less SG&A. Operating income (loss) excludes interest expense, loss on debt extinguishment, income tax expense (benefit), and other (income) expenses, net.
The components of our SG&A may not be comparable to the components of similar measures of other companies. Impairments The impairments were non-cash charges resulting from a decline in our operating results, store performance, and market capitalization.
Removed
Founded in 1963, we are the only direct-to-consumer pool and spa care brand with national scale, operating an integrated marketing and distribution ecosystem powered by a physical network of over 1,000 branded locations and a robust digital platform.
Added
Our Company 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.
Removed
We operate primarily in the pool and spa aftermarket industry, which is one of the most fundamentally attractive consumer categories given its scale, predictability, and growth outlook. More than 80% of our assortment is comprised of non-discretionary products essential to the care of residential and commercial pools and spas.
Added
With over 1,000 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.
Removed
Since our founding in 1963, we have been the leading innovator in our category and have provided our consumers with the most advanced pool and spa care available. As we have scaled, we have leveraged our competitive advantages to strategically reinvest in our business and intellectual property to develop new value-added capabilities.
Added
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.
Removed
Over the course of our history, we have pioneered complimentary in-store water testing, offered complimentary in-store equipment repair services, introduced the industry’s first loyalty program, and developed an expansive platform of owned and exclusive brands.
Added
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.
Removed
Key Factors and Measures We Use to Evaluate Our Business 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 income (loss).
Added
We then brought AccuBlue ® direct to pool owners’ backyards with AccuBlue Home ® , a pioneering app-enabled water testing device.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

6 edited+0 added−0 removed0 unchanged
Biggest changeThis price volatility could potentially have a material impact on our financial condition and/or our results of operations. We actively manage the impact of inflation, including tariffs, through strong relationships with our diverse supplier base, vendor negotiation, and promotion management. We also strategically invest through inventory purchases in order to obtain favorable pricing ahead of any vendor price increases.
Biggest changeImpact of Inflation and Deflation We experience inflation and deflation related to our purchase of certain products. This price volatility could potentially have a material impact on our financial condition and/or our results of operations. We actively manage the impact of inflation, including tariffs, through strong relationships with our diverse supplier base, vendor negotiation, and promotion management.
Item 7A. Quantitative and Qualitati ve Disclosures About Market Risk. Interest Rate Risk The interest rates on borrowings under our Revolving Credit Facility and Term Loan were LIBOR-based rates prior to March 2023 and June 2023, respectively. Due to the discontinuation of LIBOR-based rates, we have transitioned the impacted interest rate benchmarks to Term SOFR-based rates.
Item 7A. Quantitative and Qualitati ve Disclosures About Market Risk. Interest Rate Risk The interest rates on borrowings under our Revolving Credit Facility and Term Loan were LIBOR-based rates prior to March 2023 and June 2023. Due to the discontinuation of LIBOR-based rates, we have transitioned the impacted interest rate benchmarks to Term SOFR-based rates.
Although we may experience periodic effects on sales, gross profit, gross margins, and cash flows as a result of changing prices, we do not expect the effect of inflation or deflation to have a material impact on our ability to execute our long-term business strategy. We currently do not use derivative instruments to manage these risks. 45 Table of Contents
Although we may experience periodic effects on sales, gross profit, gross margins, and cash flows as a result of changing prices, we do not expect the effect of inflation or deflation to have a material impact on our ability to execute our long-term business strategy. We currently do not use derivative instruments to manage these risks. 47 Table of Contents
In order to mitigate price volatility, we monitor price fluctuations and may adjust our selling prices accordingly; however, our ability to recover higher costs through increased pricing may be limited by the competitive environment in which we operate.
We also strategically invest through inventory purchases in order to obtain favorable pricing ahead of any vendor price increases. In order to mitigate price volatility, we monitor price fluctuations and may adjust our selling prices accordingly; however, our ability to recover higher costs through increased pricing may be limited by the competitive environment in which we operate.
See Note 10—Long-Term Debt, Net to our consolidated financial statements for additional information. Accordingly, we are subject to interest rate risk in connection with borrowings under our Revolving Credit Facility and Term Loan, both of which bear interest at variable rates. As of September 28, 2024, we had $783.7 million outstanding on our Term Loan.
See Note 9—Long-Term Debt, Net to our consolidated financial statements included elsewhere in this Annual Report on Form 10-K for additional information. Accordingly, we are subject to interest rate risk in connection with borrowings under our Revolving Credit Facility and Term Loan, both of which bear interest at variable rates.
No amounts were outstanding on our Revolving Credit Facility as of such date. The impact of a 1.0% rate change on our outstanding balance less contractual amortization would total approximately $8.0 million over the next 12 months. Impact of Inflation and Deflation We experience inflation and deflation related to our purchase of certain products.
As of October 4, 2025, we had $756.7 million outstanding on our Term Loan. No amounts were outstanding on our Revolving Credit Facility as of such date. The impact of a 1.0% rate change on our outstanding balance less contractual amortization would total approximately $7.6 million over the next 12 months.

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