Leslie's Pool Corp IPO: What Investors Need To Know

Leading direct to consumer pool supply and service company Leslie’s is set to make its market debut this week.

About Leslie’s: Servicing the pool supply and services market with direct to consumer offerings and physical stores, Leslie’s Pool Corp LESL is the market share leader.

The company serves the residential, professional and commercial markets and has a 15% market share for the aftermarket residential segment.

Leslie’s has 934 locations open as of June. The company’s digital sales are five times larger than its leading competitor.

Leslie’s is the leading partner for Amazon.com AMZN in the pool category, representing 40% of sales in the pool and spa care category for the online retailer.

The Offering: Leslie’s priced 40 million shares at $17 per share on Wednesday, above the expected range of $14 to $16.

BlackRock BLK plans on becoming a new investor in Leslie’s committing to buy $100 million in shares at the offering price.

IPO Outlook: Insurance Cos, Mortgage Providers, Leslie’s Pool Supplies Highlight This Week’s Offerings

Growth in Pool Market: Leslie’s estimates the pool and spa care market at $11 billion annually.

Same-store sales rose 15.5% in the June quarter at physical Leslie’s stores.

“The stay-at-home reality of the pandemic has led to significant growth in new pool installations and pool usage,” said Leslie’s in the offering.

The company reports new pool permits are up 32% through July versus the previous year and are expected to “achieve unprecedented year-over-year growth in new pool installations in 2020.

Pool Corporation POOL has seen shares rise 73% year-to-date with growth in pool installations. The company saw record net sales of $1.14 billion in the third quarter, growing 27% year-over-year, and raised its full-year outlook on strength in the industry.

Financials: Leslie’s has posted 57 consecutive years of sales growth, with trailing twelve months sales of $1.03 billion.

Sales for the first nine months of the current fiscal year are up 16% to $730.9 million.

Revenue for Leslie’s has grown at a compounded annual growth rate of 7.5% from 2001 to 2020.

Digital sales have increased at a compounded annual growth rate of 40% from 2015 to 2019.

Leslie’s digital sales represent 26% of the company’s total for the last 12 months compared to 8% in 2015.

Benzinga’s Take: The demand for pools is growing at record levels due to the pandemic. Leslie’s is a market leader in the supplies and service market, which could set the company up for record years ahead.

Leslie’s said nearly 200,000 new in-ground pools are expected to be constructed in 2020 and 2021, which represents $5 billion in lifetime maintenance spend.