Investment Thesis
Leslie's faces severe financial distress with negative stockholders' equity of -$541.3M, indicating balance sheet insolvency. The company is burning cash at an unsustainable rate (-$146.1M FCF annually) while unable to service $855.6M in debt from operations (interest coverage: -3.8x), creating acute solvency risk.
Strengths
- Gross margin of 24.2% demonstrates reasonable product pricing power in retail
- Current ratio of 1.45x provides minimal short-term liquidity buffer
- Established brand presence in swimming pool and spa retail market
Risks
- Negative stockholders' equity of -$541.3M indicates technical insolvency on balance sheet
- Negative free cash flow of -$146.1M annually with only $16.9M cash creates critical solvency risk
- Operating losses of -$106.4M with -32.1% operating margin indicate unprofitable core business
- High debt burden of $855.6M cannot be serviced given negative operating cash flow and interest coverage
- Revenue declining 6.6% YoY signals deteriorating market position or demand
- Very low quick ratio of 0.33x indicates severe illiquidity when excluding inventory
Key Metrics to Watch
- Operating cash flow - must show improvement or restructuring imminent
- Revenue stabilization - any further decline exacerbates solvency crisis
- Cash balance trajectory - current burn rate unsustainable
- Debt restructuring announcements or covenant breach status
Financial Metrics
Revenue
331.9M
Net Income
-135.5M
EPS (Diluted)
$-14.55
Free Cash Flow
-146.1M
Total Assets
715.5M
Cash
16.9M
Profitability Ratios
Gross Margin
24.2%
Operating Margin
-32.1%
Net Margin
-40.8%
ROE
N/A
ROA
-18.9%
FCF Margin
-44.0%
Balance Sheet & Liquidity
Current Ratio
1.45x
Quick Ratio
0.33x
Debt/Equity
N/A
Debt/Assets
175.7%
Interest Coverage
-3.81x
Long-term Debt
855.7M
Disclaimer: This analysis is generated by AI based on publicly available SEC EDGAR filings.
It does not include stock price data and should not be considered financial advice.
All fundamental data is sourced from SEC public domain filings.
Always conduct your own research before making investment decisions.
Data Source: SEC EDGAR |
Analysis Date: 2026-05-15T09:40:09.183486 |
Data as of: 2026-04-04 |
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