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Core Viewpoint - Latham Group, Inc. has appointed Sean Gadd as the new President and CEO, effective January 5, 2026, following a comprehensive succession planning process led by the Board and current CEO Scott Rajeski, who will retire and serve as a special advisor to the company [1][7]. Company Overview - Latham Group, Inc. is the largest designer, manufacturer, and marketer of in-ground residential swimming pools in North America, Australia, and New Zealand, with approximately 1,850 employees across around 30 locations [8]. Leadership Transition - Sean Gadd joins Latham after a 21-year career at James Hardie, where he most recently served as President of North America, overseeing the largest regional business with full P&L responsibility [2][7]. - Gadd's experience includes roles as Executive Vice President in various capacities at James Hardie, where he contributed to significant organic net sales growth and market penetration [2]. - Gadd will also become a member of Latham's Board of Directors, replacing Scott Rajeski, who is resigning from the Board [4]. Board and Executive Comments - James E. Cline, Chairman, expressed confidence in Gadd's ability to leverage his commercial experience and branding expertise to enhance Latham's market share and conversion from concrete to fiberglass pools [3]. - Scott Rajeski acknowledged the company's strong financial position and expressed confidence in Gadd's leadership capabilities to continue outperforming the industry [5].

Core Insights - Latham Group (SWIM) is experiencing mixed trends, with general market conditions acting as a headwind while internal growth initiatives are providing some offset [1] Group 1: Market Conditions - The overall market condition is presenting challenges for Latham Group [1] Group 2: Internal Growth Initiatives - Internal growth initiatives are helping to mitigate the negative impact of market conditions [1] Group 3: Future Outlook - There are potential risks related to M&A and cyclicality in the future [1]

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Core Viewpoint - Latham Group, Inc. is set to participate in the Baird 2025 Global Industrial Conference, highlighting its position as a leading player in the in-ground residential swimming pool market [1] Company Overview - Latham Group, Inc. is the largest designer, manufacturer, and marketer of in-ground residential swimming pools in North America, Australia, and New Zealand [2] - The company operates with approximately 1,850 employees across 30 locations, showcasing a robust operational platform [2]

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Core Insights - Latham Group reported quarterly earnings of $0.08 per share, missing the Zacks Consensus Estimate of $0.10 per share, representing a -20.00% earnings surprise [1] - The company posted revenues of $161.9 million for the quarter ended September 2025, which was 1.28% below the Zacks Consensus Estimate, compared to $150.5 million in the same quarter last year [2] Earnings Performance - Over the last four quarters, Latham Group has surpassed consensus EPS estimates two times [2] - The company had a previous quarter earnings expectation of $0.13 per share but reported $0.14, resulting in a +7.69% surprise [1] Stock Performance - Latham Group shares have increased approximately 4.5% since the beginning of the year, while the S&P 500 has gained 16.5% [3] Future Outlook - The company's earnings outlook will be crucial for investors, including current consensus earnings expectations for upcoming quarters [4] - The current consensus EPS estimate for the next quarter is -$0.09 on revenues of $93 million, and $0.10 on revenues of $541 million for the current fiscal year [7] Industry Context - The Building Products - Miscellaneous industry, to which Latham Group belongs, is currently ranked in the bottom 39% of over 250 Zacks industries, indicating potential challenges [8] - Empirical research suggests a strong correlation between near-term stock movements and trends in earnings estimate revisions, which could impact Latham Group's stock performance [5][6]

Financial Data and Key Metrics Changes - Net sales increased by 7.6% year-on-year, reaching $162 million compared to $151 million in the prior year [13] - Adjusted EBITDA rose by $8.5 million, or 28.5%, totaling $38.3 million, with an adjusted EBITDA margin of 23.7%, up 390 basis points from the previous year [18] - Gross margin expanded to 35.4%, an increase of 300 basis points year-on-year [17] Business Line Data and Key Metrics Changes - In-ground pool sales increased modestly by just under 1% year-on-year, driven by fiberglass pool sales, which are expected to account for approximately 75% of full-year 2025 in-ground pool sales [6][15] - Pool covers sales grew by 15%, with significant organic growth in auto covers [9][16] - Liner sales increased by 13%, supported by the successful rollout of the Measure by Latham tool [10][16] Market Data and Key Metrics Changes - The U.S. in-ground pool market is expected to remain flat to slightly down compared to 2024 levels, yet Latham outperformed this market [4][21] - Florida sales increased at a high single-digit rate, with Latham gaining traction in master plan communities [11][12] Company Strategy and Development Direction - The company is focused on increasing awareness and adoption of fiberglass pools and auto covers, as well as expanding sales of in-ground pool liners [14] - Strategic partnerships with custom home builders in Florida are being established to enhance market presence [12][34] - Latham aims to leverage its proprietary measuring tool to gain market share in the liner product line and winter safety cover market [10][11] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in continued growth despite a challenging industry environment, projecting 7% sales growth and 19% adjusted EBITDA growth for 2025 [20][21] - The company anticipates that fiberglass pool and auto cover adoption will enable it to outperform the in-ground pool market [21] Other Important Information - The company ended the third quarter with a strong financial position, maintaining cash of $71 million and a net debt leverage ratio of 2.3 [19] - Capital expenditures for the third quarter were $5.8 million, with a revised estimate for full-year CapEx set at $22-$24 million [20] Q&A Session Summary Question: What have you seen in terms of upstream metrics from leads and consumer confidence? - Management noted strong lead generation throughout the peak pool building season, with significant year-over-year increases, although consumer confidence remains affected by tariff and interest rate uncertainties [25][26] Question: Can you provide context on the liners' performance and market share gains? - The performance is attributed to a combination of share gains in the replacement market and challenges in the lower end of the new construction market [27][28] Question: How did demand progress geographically throughout the quarter? - Demand was consistent across most regions, with strong performance in Florida, while Texas and California remained challenging markets [31][32] Question: What is the outlook for pricing and tariffs? - Price increases implemented in June have effectively mitigated tariff impacts, with net tariff exposure remaining stable at approximately $10 million [42][43] Question: Is there potential for accelerated market share gains in fiberglass pools? - Management believes that while a 1% market share gain per year is a reasonable expectation, increased traction in the Sand States could lead to accelerated growth [46][48] Question: What is the strategy for SG&A spending moving forward? - SG&A spending is expected to remain stable, with continued investments in sales and marketing initiatives, particularly in the Sand States [49][50]

Financial Performance & Outlook - The company narrows its net sales guidance for 2025 to a range of $540 million to $550 million, reflecting a 7% year-over-year growth at the midpoint[26] - Adjusted EBITDA guidance is narrowed to $92 million to $98 million, indicating a 19% year-over-year growth at the midpoint[26] - Capital expenditures guidance is revised to $22 million to $24 million, reflecting project efficiencies and timing shifts[26] - Net sales for the three fiscal quarters ended September 27, 2025, reached $445962 thousand, with an Adjusted EBITDA of $89354 thousand and an Adjusted EBITDA margin of 200%[41] - Net debt leverage ratio as of September 27, 2025, is 23, with a net debt of $210555 thousand and LTM Adjusted EBITDA of $92976 thousand[44] Market Position & Growth Strategy - The company holds the number one share in every subcategory in which it competes[9] - The company has approximately 50% share of the fiberglass category in North America[10] - Fiberglass constitutes 23% of total pool installs, marking a 600 bps increase[11] - Replacement sales account for 51% of liners and covers[13] - The company is expanding its share in the Sand States through new dealer sign-ups, presence in Master Planned Communities, and aligning products with demand[18][19][20] Market Dynamics - The company forecasts new U S pool starts in 2025 to be flat to slightly down compared to 2024 levels[25][29]

Financial Performance - Net sales for Q3 2025 were $161.9 million, an increase of 7.6% from $150.5 million in Q3 2024, driven by higher sales volume and tariff-related price increases[8] - Gross profit for Q3 2025 increased by 17.7% to $57.3 million, with gross margin expanding by 300 basis points to 35.4%[10] - Net income for Q3 2025 was $8.1 million, up 37.7% from $5.9 million in Q3 2024, resulting in an earnings per diluted share of $0.07 compared to $0.05 in the prior year[12] - Adjusted EBITDA for Q3 2025 rose by 28.5% to $38.3 million, with an adjusted EBITDA margin of 23.7%, an increase of 390 basis points from the previous year[12] - For the first nine months of 2025, net sales reached $446.0 million, a 5.9% increase from $421.2 million in the prior-year period[13] - Net income for the three fiscal quarters ended September 27, 2025, was $18,135,000, a 60.5% increase from $11,310,000 for the same period in 2024[46] - Adjusted EBITDA for the three fiscal quarters ended September 27, 2025, was $89,354,000, representing a 16.6% increase from $76,598,000 in the prior year[48] - Net sales for the three fiscal quarters ended September 27, 2025, reached $445,962,000, up 5.9% from $421,247,000 in the same period of 2024[48] Guidance and Projections - The company narrowed its net sales guidance for 2025 to a range of $540-$550 million, reflecting a projected 7% growth[20] - Adjusted EBITDA guidance for 2025 is set at $92-$98 million, indicating a 19% growth at the midpoints[20] - Capital expenditures for 2025 are revised to a range of $22-$24 million, down from the previous estimate of $27-$33 million[24] - The company expects fiberglass pools to gain another percentage point of market share, reaching approximately 24% of total U.S. in-ground pool sales in 2025[22] Debt and Liquidity - Latham's net debt leverage ratio improved to 2.3 from 3.0 in the previous quarter, with total debt at $281.1 million[17] - The company reported a net debt of $277,823,000 as of September 27, 2025, with a net debt leverage ratio calculated based on last twelve months of Adjusted EBITDA[41] - Total current assets increased to $240,915,000 from $178,298,000 as of December 31, 2024, reflecting improved liquidity[44] - Total liabilities rose to $436,065,000 from $406,985,000 as of December 31, 2024, indicating a slight increase in leverage[44] - The company’s cash balance increased to $70,518,000 from $56,398,000, enhancing its financial flexibility[44] Operating Expenses - Selling, general, and administrative expenses for the quarter were $28,586,000, slightly up from $28,336,000 in the previous year[42] - The company incurred $4,934,000 in acquisition costs, significantly lower than $64,046,000 in the previous year[46] - Stock-based compensation expense for the three fiscal quarters ended September 27, 2025, was $5,332,000, slightly up from $5,187,000 in the prior year[48] Other Financial Metrics - The net cash provided by operating activities for the three fiscal quarters ended September 27, 2025, was $40,121,000, compared to $55,150,000 in the prior year, reflecting a decrease of 27.3%[46] - The adjusted EBITDA margin improved to 20.0% for the three fiscal quarters ended September 27, 2025, compared to 18.2% in the same period of 2024[48] - Cash at the end of the period was $70,518,000, an increase from $59,862,000 at the end of the same period in 2024[46] - The company experienced a foreign currency loss of $2,878,000 for the three fiscal quarters ended September 27, 2025, compared to a gain of $1,668,000 in the same period of 2024[48] Market Conditions - The company anticipates future operating results to be influenced by macroeconomic conditions and changes in consumer demand[37]