0000950170-22-000781.txt : 20220204 0000950170-22-000781.hdr.sgml : 20220204 20220204160641 ACCESSION NUMBER: 0000950170-22-000781 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 80 CONFORMED PERIOD OF REPORT: 20220101 FILED AS OF DATE: 20220204 DATE AS OF CHANGE: 20220204 FILER: COMPANY DATA: COMPANY CONFORMED NAME: Leslie's, Inc. CENTRAL INDEX KEY: 0001821806 STANDARD INDUSTRIAL CLASSIFICATION: RETAIL-RETAIL STORES, NEC [5990] IRS NUMBER: 000000000 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-39667 FILM NUMBER: 22593280 BUSINESS ADDRESS: STREET 1: 2005 E. INDIAN SCHOOL ROAD CITY: PHOENIX STATE: AZ ZIP: 85016 BUSINESS PHONE: 602-366-3817 MAIL ADDRESS: STREET 1: 2005 E. INDIAN SCHOOL ROAD CITY: PHOENIX STATE: AZ ZIP: 85016 10-Q 1 lesl-20220101.htm 10-Q 10-Q
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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

FORM 10-Q

 

(Mark One)

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended January 1, 2022

OR

 

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM TO

Commission File Number 001-39667

 

LESLIE’S, INC.

(Exact Name of Registrant as Specified in its Charter)

 

 

Delaware

20-8397425

(State or other jurisdiction of

incorporation or organization)

(I.R.S. Employer

Identification No.)

2005 East Indian School Road

Phoenix, AZ

85016

(Address of principal executive offices)

(Zip Code)

Registrant’s telephone number, including area code: (602) 366-3999

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class

 

Trading

Symbol(s)

 

Name of each exchange on which registered

Common Stock, par value $0.001 per share

 

LESL

 

The Nasdaq Global Select Market

 

Indicate by check mark whether the Registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. YesNo

Indicate by check mark whether the Registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the Registrant was required to submit such files). YesNo

Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer

 

 

Accelerated filer

 

 

 

 

 

Non-accelerated filer

 

 

Smaller reporting company

 

 

 

 

 

 

 

 

Emerging growth company

 

 

 

 

 

 

If an emerging growth company, indicate by check mark if the Registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). YesNo

As of January 31, 2022, the Registrant had 182,539,417 shares of common stock, $0.001 par value per share, outstanding.

 

 

 


Table of Contents

Table of Contents

 

 

 

Page

PART I

FINANCIAL INFORMATION

 

Item 1.

Financial Statements

2

 

Condensed Consolidated Balance Sheets

2

 

Condensed Consolidated Statements of Operations

3

 

Condensed Consolidated Statements of Stockholders’ Deficit

4

 

Condensed Consolidated Statements of Cash Flows

5

 

Notes to Unaudited Condensed Consolidated Financial Statements

6

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

15

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

24

Item 4.

Controls and Procedures

25

 

 

 

PART II

OTHER INFORMATION

 

Item 1.

Legal Proceedings

26

Item 1A.

Risk Factors

26

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

26

Item 3.

Defaults Upon Senior Securities

26

Item 4.

Mine Safety Disclosures

26

Item 5.

Other Information

26

Item 6.

Exhibits

27

 

 

 

Signatures

 

28

 

i


Table of Contents

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains forward-looking statements about us and our industry that involve substantial risks and uncertainties. All statements other than statements of historical fact contained in this Quarterly Report on Form 10-Q, including statements regarding our future results of operations or financial condition, business strategy and plans and objectives of management for future operations, are forward-looking statements. In some cases, you can identify forward-looking statements because they contain words such as “anticipate,” “believe,” “contemplate,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “plan,” “potential,” “predict,” “project,” “should,” “target,” “will,” or “would” or the negative of these words or other similar terms or expressions. Our actual results could differ materially from those indicated in these forward-looking statements for a variety of reasons, including, among others:

our ability to execute on our growth strategies;
our ability to maintain favorable relationships with suppliers and manufacturers;
competition from mass merchants and specialty retailers;
impacts on our business from the sensitivity of our business to weather conditions, changes in the economy, and the housing market;
our ability to implement technology initiatives that deliver the anticipated benefits, without disrupting our operations;
our ability to attract and retain senior management and other qualified personnel;
regulatory changes and development affecting our current and future products;
our ability to obtain additional capital to finance operations;
commodity price inflation and deflation;
impacts on our business from the COVID-19 pandemic;
impacts on our business from cyber incidents and other security threats or disruptions; and
other risks and uncertainties, including those listed in the section titled “Risk Factors” in our filings with the United States Securities and Exchange Commission.

You should not rely on forward-looking statements as predictions of future events. We have based the forward-looking statements contained in this Quarterly Report on Form 10-Q primarily on our current expectations and projections about future events and trends that we believe may affect our business, financial condition, and operating results. The outcome of the events described in these forward-looking statements is subject to risks, uncertainties, and other factors described in Part I, Item 1A, “Risk Factors” of our Annual Report on Form 10-K for the year ended October 2, 2021 and elsewhere in this Quarterly Report on Form 10-Q. Moreover, we operate in a very competitive and rapidly changing environment. New risks and uncertainties emerge from time to time, and it is not possible for us to predict all risks and uncertainties that could have an impact on the forward-looking statements contained in this Quarterly Report on Form 10-Q. The results, events, and circumstances reflected in the forward-looking statements may not be achieved or occur, and actual results, events, or circumstances could differ materially from those described in the forward-looking statements.

In addition, statements that “we believe” and similar statements reflect our beliefs and opinions on the relevant subject. These statements are based on information available to us as of the date of this Quarterly Report on Form 10-Q and while we believe that information provides a reasonable basis for these statements, that information may be limited or incomplete. Our statements should not be read to indicate that we have conducted an exhaustive inquiry into, or review of, all relevant information. These statements are inherently uncertain, and investors are cautioned not to unduly rely on these statements.

The forward-looking statements made in this Quarterly Report on Form 10-Q are based on events or circumstances as of the date on which the statements are made. We undertake no obligation to update any forward-looking statements made in this Quarterly Report on Form 10-Q to reflect events or circumstances after the date of this Quarterly Report on Form 10-Q or to reflect new information or the occurrence of unanticipated events, except as required by law. We may not actually achieve the plans, intentions, or expectations disclosed in our forward-looking statements, and you should not place undue reliance on our forward-looking statements. Our forward-looking statements do not reflect the potential impact of any future acquisitions, mergers, dispositions, joint ventures, or investments.

1


Table of Contents

PART I - FINANCIAL INFORMATION

 

Item 1. Financial Statements.

LESLIE’S, INC.

CONDENSED Consolidated Balance Sheets

(Amounts in Thousands, Except Share and Per Share Amounts)

 

 

 

January 1, 2022

 

 

October 2, 2021

 

 

January 2, 2021

 

 

 

(Unaudited)

 

 

(Audited)

 

 

(Unaudited)

 

Assets

 

 

 

 

 

 

 

 

 

Current assets

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

53,341

 

 

$

343,498

 

 

$

102,809

 

Accounts and other receivables, net

 

 

39,353

 

 

 

38,860

 

 

 

37,116

 

Inventories

 

 

244,632

 

 

 

198,789

 

 

 

174,535

 

Prepaid expenses and other current assets

 

 

38,173

 

 

 

20,564

 

 

 

25,604

 

Total current assets

 

 

375,499

 

 

 

601,711

 

 

 

340,064

 

Property and equipment, net

 

 

65,883

 

 

 

70,335

 

 

 

62,628

 

Operating lease right-of-use assets

 

 

207,291

 

 

 

212,284

 

 

 

191,125

 

Goodwill and other intangibles, net

 

 

132,428

 

 

 

129,020

 

 

 

120,636

 

Deferred tax assets

 

 

2,327

 

 

 

3,734

 

 

 

14,729

 

Other assets

 

 

27,837

 

 

 

25,148

 

 

 

16,658

 

Total assets

 

$

811,265

 

 

$

1,042,232

 

 

$

745,840

 

Liabilities and stockholders’ deficit

 

 

 

 

 

 

 

 

 

Current liabilities

 

 

 

 

 

 

 

 

 

Accounts payable and accrued expenses

 

$

188,824

 

 

$

233,597

 

 

$

126,864

 

Operating lease liabilities

 

 

56,873

 

 

 

61,071

 

 

 

56,398

 

Income taxes payable

 

 

411

 

 

 

6,945

 

 

 

 

Current portion of long-term debt

 

 

8,100

 

 

 

8,100

 

 

 

8,341

 

Total current liabilities

 

 

254,208

 

 

 

309,713

 

 

 

191,603

 

Operating lease liabilities, noncurrent

 

 

153,834

 

 

 

160,037

 

 

 

139,796

 

Long-term debt, net

 

 

784,527

 

 

 

786,125

 

 

 

795,394

 

Other long-term liabilities

 

 

 

 

 

3,915

 

 

 

5,457

 

Total liabilities

 

 

1,192,569

 

 

 

1,259,790

 

 

 

1,132,250

 

Commitments and contingencies

 

 

 

 

 

 

 

 

 

Stockholders’ deficit

 

 

 

 

 

 

 

 

 

Common stock, $0.001 par value, 1,000,000,000 shares authorized and 182,496,645, 189,821,011 and 186,618,446 issued and outstanding as of January 1, 2022, October 2, 2021 and January 2, 2021, respectively.

 

 

182

 

 

 

190

 

 

 

187

 

Additional paid in capital

 

 

80,062

 

 

 

204,711

 

 

 

192,753

 

Retained deficit

 

 

(461,548

)

 

 

(422,459

)

 

 

(579,350

)

Total stockholders’ deficit

 

 

(381,304

)

 

 

(217,558

)

 

 

(386,410

)

Total liabilities and stockholders’ deficit

 

$

811,265

 

 

$

1,042,232

 

 

$

745,840

 

 

See accompanying notes which are an integral part of these condensed consolidated financial statements.

2


Table of Contents

LESLIE’S, INC.

CONDENSED Consolidated Statements of Operations

(Amounts in Thousands, Except Per Share Amounts)

(Unaudited)

 

 

 

Three Months Ended

 

 

 

January 1, 2022

 

 

January 2, 2021

 

Sales

 

$

184,824

 

 

$

145,006

 

Cost of merchandise and services sold

 

 

117,508

 

 

 

93,291

 

Gross profit

 

 

67,316

 

 

 

51,715

 

Selling, general and administrative expenses

 

 

79,785

 

 

 

77,489

 

Operating loss

 

 

(12,469

)

 

 

(25,774

)

Other expense:

 

 

 

 

 

 

Interest expense

 

 

6,863

 

 

 

11,516

 

Loss on debt extinguishment

 

 

 

 

 

7,281

 

Other expenses, net

 

 

389

 

 

 

 

Total other expense

 

 

7,252

 

 

 

18,797

 

Loss before taxes

 

 

(19,721

)

 

 

(44,571

)

Income tax benefit

 

 

(5,270

)

 

 

(14,314

)

Net loss

 

$

(14,451

)

 

$

(30,257

)

Earnings per share:

 

 

 

 

 

 

Basic

 

$

(0.08

)

 

$

(0.17

)

Diluted

 

$

(0.08

)

 

$

(0.17

)

Weighted average shares outstanding:

 

 

 

 

 

 

Basic

 

 

188,507

 

 

 

176,990

 

Diluted

 

 

188,507

 

 

 

176,990

 

 

See accompanying notes which are an integral part of these condensed consolidated financial statements.

3


Table of Contents

LESLIE’S, INC.

CONDENSED Consolidated Statements of Stockholders’ Deficit

(Amounts in Thousands)

(Unaudited)

 

 

 

Common Stock

 

 

Additional
Paid in
Capital

 

 

Retained

 

 

Total
Stockholders’

 

 

 

Shares

 

 

Amount

 

 

(Deficit)

 

 

Deficit

 

 

Deficit

 

Balance, October 3, 2020

 

 

156,500

 

 

$

157

 

 

$

(278,063

)

 

$

(549,093

)

 

$

(826,999

)

Issuance of common stock upon initial public offering,
   net of offering costs

 

 

30,000

 

 

 

30

 

 

 

458,656

 

 

 

 

 

 

458,686

 

Issuance of shares under stock incentive plans

 

 

118

 

 

 

 

 

 

 

 

 

 

 

 

 

Equity-based compensation

 

 

 

 

 

 

 

 

12,160

 

 

 

 

 

 

12,160

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

(30,257

)

 

 

(30,257

)

Balance, January 2, 2021

 

 

186,618

 

 

$

187

 

 

$

192,753

 

 

$

(579,350

)

 

$

(386,410

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance, October 2, 2021

 

 

189,821

 

 

$

190

 

 

$

204,711

 

 

$

(422,459

)

 

$

(217,558

)

Vesting of restricted stock units

 

 

170

 

 

 

 

 

 

 

 

 

 

 

 

 

Stock options exercised

 

 

6

 

 

 

 

 

 

100

 

 

 

 

 

 

100

 

Equity-based compensation

 

 

 

 

 

 

 

 

2,751

 

 

 

 

 

 

2,751

 

Repurchase and retirement of common stock

 

 

(7,500

)

 

 

(8

)

 

 

(127,500

)

 

 

(24,638

)

 

 

(152,146

)

Net loss

 

 

 

 

 

 

 

 

 

 

 

(14,451

)

 

 

(14,451

)

Balance, January 1, 2022

 

 

182,497

 

 

$

182

 

 

$

80,062

 

 

$

(461,548

)

 

$

(381,304

)

 

See accompanying notes which are an integral part of these condensed consolidated financial statements.

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LESLIE’S, INC.

CONDENSED Consolidated Statements of Cash Flows

(Amounts in Thousands)

(Unaudited)

 

 

 

Three Months Ended

 

 

 

January 1, 2022

 

 

January 2, 2021

 

Operating Activities

 

 

 

 

 

 

Net loss

 

$

(14,451

)

 

$

(30,257

)

Adjustments to reconcile net income to net cash provided by (used in) operating activities:

 

 

 

 

 

 

Depreciation and amortization

 

 

9,241

 

 

 

6,595

 

Equity-based compensation

 

 

2,751

 

 

 

12,160

 

Amortization of deferred financing costs and debt discounts

 

 

496

 

 

 

648

 

Provision for doubtful accounts

 

 

249

 

 

 

59

 

Deferred income taxes

 

 

1,407

 

 

 

(8,146

)

Loss (gain) on disposition of assets

 

 

17

 

 

 

(1,758

)

Loss on debt extinguishment

 

 

 

 

 

7,281

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

Accounts and other receivables

 

 

(742

)

 

 

(5,694

)

Inventories

 

 

(43,723

)

 

 

(25,569

)

Prepaid expenses and other current assets

 

 

(17,593

)

 

 

(2,943

)

Other assets

 

 

(2,741

)

 

 

(2,215

)

Accounts payable and accrued expenses

 

 

(48,528

)

 

 

(65,626

)

Income taxes payable

 

 

(6,534

)

 

 

(1,857

)

Operating lease assets and liabilities, net

 

 

(5,408

)

 

 

(1,969

)

Net cash used in operating activities

 

 

(125,559

)

 

 

(119,291

)

Investing Activities

 

 

 

 

 

 

Purchases of property and equipment

 

 

(5,402

)

 

 

(2,706

)

Business acquisitions, net of cash acquired

 

 

(5,146

)

 

 

 

Proceeds from disposition of fixed assets

 

 

21

 

 

 

2,404

 

Net cash used in investing activities

 

 

(10,527

)

 

 

(302

)

Financing Activities

 

 

 

 

 

 

Repayment of long term debt

 

 

(2,025

)

 

 

(392,085

)

Proceeds from options exercised

 

 

100

 

 

 

 

Repurchase and retirement of common stock

 

 

(152,146

)

 

 

 

Proceeds from issuance of common stock upon initial public offering, net

 

 

 

 

 

458,686

 

Net cash (used in) provided by financing activities

 

 

(154,071

)

 

 

66,601

 

Net decrease in cash and cash equivalents

 

 

(290,157

)

 

 

(52,992

)

Cash and cash equivalents, beginning of period

 

 

343,498

 

 

 

155,801

 

Cash and cash equivalents, end of period

 

$

53,341

 

 

$

102,809

 

Supplemental Information:

 

 

 

 

 

 

Interest

 

$

6,725

 

 

$

19,635

 

Income taxes, net of refunds received

 

 

(50

)

 

 

920

 

 

See accompanying notes which are an integral part of these condensed consolidated financial statements.

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Table of Contents

LESLIE’S, INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Note 1—Business and Operations

Leslie’s, Inc. (“Leslie’s,” “we,” “our,” “us,” “its,” or the “Company”) is the leading direct-to-consumer pool and spa care brand. We market and sell pool and spa supplies and related products and services, which primarily consist of maintenance items such as chemicals, equipment and parts, cleaning accessories, as well as safety, recreational, and fitness-related products. We currently market our products through 959 company-operated locations in 38 states and e-commerce websites.

Note 2—Summary of Significant Accounting Policies

Basis of Presentation and Principles of Consolidation

We prepared the accompanying interim condensed consolidated financial statements following United States generally accepted accounting principles (“GAAP”). The financial statements include all normal and recurring adjustments that are necessary for a fair presentation of our financial position and operating results. The interim condensed consolidated financial statements include the accounts of Leslie’s, Inc. and our subsidiaries. All significant intercompany accounts and transactions have been eliminated. These interim condensed consolidated financial statements and the related notes should be read in conjunction with the audited consolidated financial statements and notes for the years ended October 2, 2021, October 3, 2020 and September 28, 2019.

Fiscal Periods

We operate on a fiscal calendar that results in a fiscal year consisting of a 52- or 53-week period ending on the Saturday closest to September 30th. In a 52-week fiscal year, each quarter contains 13 weeks of operations; in a 53-week fiscal year, each of the first, second and third quarters includes 13 weeks of operations and the fourth quarter includes 14 weeks of operations. References to the three months ended January 1, 2022, and the three months ended January 2, 2021 refer to the 13 weeks ended January 1, 2022 and January 2, 2021, respectively.

Use of Estimates

To prepare financial statements that conform to GAAP, we make estimates and assumptions that affect the amounts reported in our financial statements and accompanying notes. Our most significant estimates relate to sales returns, inventory obsolescence reserves, lease assumptions, vendor rebate programs, income taxes, self-insurance, valuation of intangible assets and goodwill and intangible asset impairment evaluations. We continually review our estimates and make adjustments as necessary, but actual results could be significantly different from what we expected when we made these estimates.

Prior Period Reclassifications

Reclassifications of certain immaterial prior period amounts have been made to conform to current period presentation.

Fair Value Measurements

We use fair value measurements to record fair value of certain assets and to estimate fair value of financial instruments not recorded at fair value but required to be disclosed at fair value.

As of January 1, 2022 and October 2, 2021, we held no assets that are required to be measured at fair value on a recurring basis.

The fair value of our amended and restated term loan credit agreement (“Term Loan”) due in 2028 (see Note 9) was determined to be $800.4 million and $802.9 million as of January 1, 2022 and October 2, 2021, respectively. These fair value estimates, determined to be Level 2, are subjective in nature and involve uncertainties and matters of judgment and therefore cannot be determined with precision. Changes in assumptions could significantly affect these estimates.

The carrying amounts of cash, cash equivalents, accounts receivable, accounts payable, and accrued expenses approximate fair value due to the short-term maturity of these instruments.

There were no transfers between levels in the fair value hierarchy during the three months ended January 1, 2022 and January 2, 2021.

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Table of Contents

Seasonality

Our business is highly seasonal. In general, sales and earnings are highest during our third and fourth fiscal quarters, being April through September and represent the peak months of swimming pool use. Sales are substantially lower during our first and second fiscal quarters.

Recent Accounting Pronouncements

In December 2019, the FASB issued ASU No. 2019-12, Income Taxes (“Topic 740”): Simplifying the Accounting for Income Taxes. ASU 2019-12 removes certain exceptions related to intraperiod tax allocations, foreign subsidiaries and interim reporting that are present within existing GAAP rules. The ASU also provides updated guidance regarding the tax treatment of certain franchise taxes, goodwill and nontaxable entities, among other items. In addition, ASU 2019-12 clarifies that the effect of a change in tax laws or rates should be reflected in the annual effective tax rate computation during the interim period that includes the enactment date. The ASU is effective for annual periods beginning after December 15, 2021 and interim periods beginning after December 15, 2022. We expect to early adopt ASU 2019-12 as of October 3, 2022. In anticipation of the adoption and based on management’s initial evaluation of the projected impact to our consolidated financial statements, we do not estimate there to be a material impact.

In October 2021, the FASB issued ASU No. 2021-08, Business Combinations (“Topic 805”): Accounting for contract assets and contract liabilities from contracts with customers, which includes certain amendments to improve, simplify, and provide consistency for recognition and measurement of acquired contract assets and contract liabilities from revenue contracts in a business combination. The amendments require that an acquirer recognize and measure such contract assets and contract liabilities under Topic 606, Revenue from Contracts with Customers, as if it had originated the contracts. The amendments also allow for election of certain practical expedients, which are applied on an acquisition-by-acquisition basis. The ASU is effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. Early adoption is permitted, including for any interim period, and if elected, the amendments are applied retrospectively for any acquisitions that occurred in the fiscal year of interim adoption. We expect to early adopt ASU 2021-08 as of October 3, 2022.

Note 3—Business Combinations

Fiscal 2022 Acquisition

In October 2021, we acquired the assets of a retailer of pool supplies and services. The acquisition included seven locations in the greater Phoenix, Arizona area. Our estimates and assumptions are subject to change as we gather additional information throughout the measurement period, which is up to 12 months after the acquisition date. If we make changes to the amounts recorded, such adjustments will be recorded in the period in which they are identified.

Fiscal 2021 Acquisitions

In fiscal 2021, we completed three acquisitions of retailers of supplies and services for hot tubs, swim spas and fireplaces with eight locations in Denver, Colorado, Medford, Oregon, and the Washington, DC area.

These acquisitions did not have a material impact on our financial position or results of operations. Our condensed consolidated financial statements include the results of operations of these acquisitions from the date of acquisition. The total purchase consideration was allocated to the assets acquired and the liabilities assumed at their estimated fair values as of the date of acquisition, as determined by management. The excess of the purchase price over the amounts allocated to assets acquired and liabilities assumed has been recorded as goodwill. The goodwill resulting from these acquisitions is expected to be deductible for income tax purposes. Our estimates and assumptions are subject to change as we gather additional information throughout the measurement period, which is up to 12 months after the acquisition date, and if we make changes to the amounts recorded, such amounts are recorded in the period in which they are identified. During the three months ended January 1, 2022, we recorded adjustments resulting in an increase in goodwill of $1.5 million related to these acquisitions.

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Table of Contents

Note 4 —Goodwill and Other Intangibles, Net

Goodwill

The carrying amounts of goodwill are as follows (in thousands):

 

 

 

January 1, 2022

 

 

October 2, 2021

 

 

January 2, 2021

 

Balance at beginning of the period

 

$

101,114

 

 

$

93,295

 

 

$

93,295

 

Acquisitions

 

 

3,200

 

 

 

7,819

 

 

 

 

Measurement period adjustments

 

 

1,475

 

 

 

 

 

 

 

Balance at the end of the period

 

$

105,789

 

 

$

101,114

 

 

$

93,295

 

 

Other Intangible Assets

Other intangible assets consisted of the following as of January 1, 2022 (in thousands, except weighted average remaining useful life):

 

 

 

Weighted
Average
Remaining
Useful Life
(in Years)

 

 

Gross
Carrying
Value

 

 

Accumulated
Amortization

 

 

Net
Carrying
Amount

 

Trade name and trademarks (finite life)

 

 

6.5

 

 

$

5,940

 

 

$

(5,311

)

 

$

629

 

Trade name and trademarks (indefinite life)

 

Indefinite

 

 

 

17,750

 

 

 

 

 

 

17,750

 

Non-compete agreements

 

 

7.2

 

 

 

8,633

 

 

 

(7,174

)

 

 

1,459

 

Consumer relationships

 

 

6.3

 

 

 

19,000

 

 

 

(12,545

)

 

 

6,455

 

Other intangibles

 

 

6.9

 

 

 

6,620

 

 

 

(6,274

)

 

 

346

 

Total

 

 

 

 

$

57,943

 

 

$

(31,304

)

 

$

26,639

 

 

Other intangible assets consisted of the following as of October 2, 2021 (in thousands, except weighted average remaining useful life):

 

 

 

Weighted
Average
Remaining
Useful Life
(in Years)

 

 

Gross
Carrying
Value

 

 

Accumulated
Amortization

 

 

Net
Carrying
Amount

 

Trade name and trademarks (finite life)

 

 

6.6

 

 

$

5,940

 

 

$

(5,274

)

 

$

666

 

Trade name and trademarks (indefinite life)

 

Indefinite

 

 

 

17,750

 

 

 

 

 

 

17,750

 

Non-compete agreements

 

 

7.5

 

 

 

8,633

 

 

 

(7,123

)

 

 

1,510

 

Consumer relationships

 

 

6.4

 

 

 

19,000

 

 

 

(11,688

)

 

 

7,312

 

Other intangibles

 

 

7.0

 

 

 

6,620

 

 

 

(5,952

)

 

 

668

 

Total

 

 

 

 

$

57,943

 

 

$

(30,037

)

 

$

27,906

 

 

Other intangible assets consisted of the following as of January 2, 2021 (in thousands, except weighted average remaining useful life):

 

 

 

Weighted
Average
Remaining
Useful Life
(in Years)

 

 

Gross
Carrying
Value

 

 

Accumulated
Amortization

 

 

Net
Carrying
Amount

 

Trade name and trademarks (finite life)

 

 

3.4

 

 

$

5,540

 

 

$

(5,167

)

 

$

373

 

Trade name and trademarks (indefinite life)

 

Indefinite

 

 

 

17,750

 

 

 

 

 

 

17,750

 

Non-compete agreements

 

 

8.2

 

 

 

8,633

 

 

 

(6,958

)

 

 

1,675

 

Consumer relationships

 

 

5.9

 

 

 

17,200

 

 

 

(10,485

)

 

 

6,715

 

Other intangibles

 

 

7.1

 

 

 

6,620

 

 

 

(5,769

)

 

 

851

 

Total

 

 

 

 

$

55,743

 

 

$

(28,379

)

 

$

27,364

 

 

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Table of Contents

Amortization expense was $1.3 million and $0.5 million for the three months ended January 1, 2022 and January 2, 2021, respectively. No impairment of goodwill or other intangible assets was recorded during the three months ended January 1, 2022 or January 2, 2021.

The following table summarizes the estimated future amortization expense related to finite-lived intangible assets on our condensed consolidated balance sheet as of January 1, 2022 (in thousands):

 

 

 

Amount

 

Remainder of fiscal 2022

 

$

1,167

 

2023

 

 

1,923

 

2024

 

 

1,285

 

2025

 

 

1,188

 

2026

 

 

942

 

Thereafter

 

 

2,384

 

Total

 

$

8,889

 

 

Note 5—Accounts and Other Receivables, Net

Accounts and other receivables, net consisted of the following (in thousands):

 

 

 

January 1, 2022

 

 

October 2, 2021

 

 

January 2, 2021

 

Vendor and other rebates receivable

 

$

26,476

 

 

$

23,222

 

 

$

22,753

 

Customer receivables

 

 

11,415

 

 

 

13,473

 

 

 

5,533

 

Other receivables

 

 

4,155

 

 

 

4,621

 

 

 

9,523

 

Allowance for doubtful accounts

 

 

(2,693

)

 

 

(2,456

)

 

 

(693

)

Total

 

$

39,353

 

 

$

38,860

 

 

$

37,116

 

 

Note 6—Inventories

Inventories consisted of the following (in thousands):

 

 

 

January 1, 2022

 

 

October 2, 2021

 

 

January 2, 2021

 

Raw materials

 

$

4,741

 

 

$

4,244

 

 

$

2,577

 

Finished goods

 

 

239,891

 

 

 

194,545