Leslie’s, Inc. (NASDAQ:LESL) Q1 2023 Earnings Call Transcript

David Bellinger: Got it. That’s very helpful. And just my follow-up here on Mike, some of your ending comments in the prepared remarks, just on the indications of reduced confidence in the category. So, are you hearing that from your PRO customers, as well as some of the larger PROs particularly? And I’m just curious, if we were to see a wider slowdown across pool, would you see that more pronounced from the PRO or the DIY customer at first? Maybe just give us some thoughts there.

Mike Egeck: Yes. Look, I think the way to think about demand is to keep in mind, it’s a very small quarter, right, for the whole industry. And I know we’ve said that a lot, but again, trying to extrapolate trends from this first quarter, which is, a, small; and b, had a really outsized weather impact, I just think that’s tricky. And internally, we’re trying not to do that. In terms of DIY versus PRO, as I said in the earlier question, very similar behavior that we saw in both channels. And we look really hard for any indication that there might be some switch from PRO to DIY, and we did not see that. So, we expect the PRO business to play out for the year as anticipated when we put out our guide, and we expect the residential business to do the same.

David Bellinger: Got it. Thank you.

Operator: Our next question is from Garik Shmois with Loop Capital Markets. Please proceed.

Garik Shmois: Hi, thank you. Just wondering if you could speak on the impact of Trichlor. Obviously, it’s held in here, and you’ve said in the past you plan to hold on to it as much as you possibly can, but just given the big delta between how resilient pricing has been so far versus what’s in your guidance, so I was wondering if you could maybe provide some perspective on if you would anticipate pricing to come down? And when might that be or if there’s any signs of weakness there that you’re seeing at this point at all?

Mike Egeck: Yes, Garik. Thanks for the question. The pricing for pool season really gets set Memorial Day weekend. We’ve talked about that a little bit before at some conferences as well as calls. That’s when I would say the industry settles in on price for the balance of the pool season. So, up until that point, we try not to make any assumptions. We talked about at our Investor Day that there’s a case for price deflation in Trichlor. We have not seen any evidence of that. We know that Trichlor costing is up. I think that is now set in the industry, and it would be unusual for the industry to discount off of that. But there’s a lot of chatter about that potential outcome. So, we’re not discounting it, which is why we have it in our guide as a possibility, but to date, we haven’t seen any inclination of price deflation in PRO or Residential. And just to reiterate, there’s plenty of inventory in the channel. I would say everybody is fully inventoried in Trichlor.

Garik Shmois: Got it. That’s helpful. Follow-up question is just you spoke to the weather impacts on the quarter. It sounds like most of that was on the nondiscretionary side, but I’m just wondering if there might possibly be any pent-up demand from any purchases that might have been pushed out due to the weather or should we assume that those sales were effective, they lost with the poor weather in the quarter?