Leslie's Seeks $600 Million U.S. IPO

Summary

• Leslie's has filed proposed terms for its $600 million IPO.
• The company sells pool and spa care supplies and services in the United States.
• LESL has produced impressive growth, earnings and free cash flow, despite the Covid-19 pandemic, so the IPO is worth a close look.
• Looking for more investing ideas like this one? Get them exclusively at IPO Edge. Get started today »

Quick Take

Leslie's (NASDAQ:LESL) has filed to raise $600 million in an IPO of its common stock, according to an S-1 registration statement.

The firm provides pool and spa care products and services in the United States.

LESL has significant industry dominance, accelerating revenue growth rate despite the Covid-19 pandemic, positive earnings and material free cash flow; the IPO price assumption appears reasonable.

Company & Business

Phoenix, Arizona-based Leslie's was founded in 1963 to create a network of retail locations providing pool and spa products and services.

Management is headed by Chief Executive Officer Michael Egeck, who has been with the firm since February 2020 and was previously CEO of PSEB Group, a company comprising the Eddie Bauer brand and PACSUN teen retailer.

Below is a brief overview video of Leslie's:

Source: Leslie's

The company’s primary offerings include:

• In-store testing

• On-site installation and repair

• Equipment, parts and accessories

• Chemicals

Leslie's has received at least $278 million from investors including private equity firm L Catterton.

Customer Acquisition

The firm sells its products and services through 934 branded locations and an online presence.

Management says it has a dominant market share of 15% with a physical network that is 'larger than the sum of our twenty largest competitors.'

Selling, G&A expenses as a percentage of total revenue have been rising as revenues have increased, as the figures below indicate:

Selling, G&A	Expenses vs. Revenue
Period	Percentage
Nine Mos. Ended June 27, 2020	29.5%
FYE September 28, 2019	27.8%
FYE September 29, 2018	27.1%

Click to enlarge

Source: Company registration statement

The Selling, G&A efficiency rate, defined as how many dollars of additional new revenue are generated by each dollar of Selling, G&A spend, rose to 0.5x in the most recent reporting period, as shown in the table below:

Selling, G&A

Analyst’s Disclosure:I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.