Financial Data and Key Metrics Changes - In Q4 2021, the company reported net sales growth of 24.1% year-over-year, reaching $138.9 million, with adjusted EBITDA growth of 56.5% to $27.3 million [7][22][18] - For the full year 2021, net sales increased by 56.3% to $630.5 million, with adjusted EBITDA rising by 66.8% to $139.8 million [22][25] - Gross profit for Q4 2021 was $42.4 million, an increase of 11.5%, while gross margin decreased to 30.5% from 34.0% year-over-year [19][24] Business Line Data and Key Metrics Changes - In-ground swimming pools sales increased by $15.0 million to $82.8 million in Q4 2021, covers increased by $6.8 million to $37.8 million, and liners increased by $5.1 million to $18.3 million [18] - For the full year, sales growth across product lines included $131.1 million for in-ground swimming pools, $47.6 million for covers, and $48.4 million for liners [23] Market Data and Key Metrics Changes - The company noted strong consumer interest and demand for pools, with a significant increase in fiberglass production levels, which rose 35% sequentially from Q3 2021 [7][10] - The company is focused on expanding its market share in the U.S. pool installations, particularly in states like Florida, Texas, Nevada, and Arizona [13] Company Strategy and Development Direction - The company continues to execute its growth strategy by converting concrete pools to fiberglass and enhancing its digital tools for consumer engagement [8][11] - The acquisition of Radiant Pools is expected to expand the company's product portfolio and addressable market [8][12] - The company plans to invest in capacity expansion, including a new fiberglass facility in Kingston, Canada, to support long-term growth [10][12] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving robust growth in 2022, with expected net sales between $850 million and $880 million, representing a year-over-year growth of 35% to 40% [14][32] - The company anticipates continued strong demand for its products driven by trends in outdoor living and suburban migration [14][30] - Management acknowledged potential challenges in the first half of 2022 due to tough comparisons and labor availability but expects a ramp-up in growth in the second half [31] Other Important Information - The company refinanced its term loan and revolving credit facilities, enhancing financial flexibility and reducing interest expenses [27] - Non-cash stock-based compensation is expected to be approximately $56 million in 2022, impacting SG&A expenses [33] Q&A Session Summary Question: Impact of oil price movements on pricing strategy - Management indicated they will continue to monitor inflation and have pricing strategies in place to support their 2022 outlook [40] Question: Growth of grand dealers and strategy in sand states - Management confirmed ongoing efforts to grow dealer installation capacity and noted positive progress in sand states [41][42] Question: Backlogs and lead times - Management expects to narrow the price gap and work through backlogs by late Q2 or early Q3 2022 [51][52] Question: Resin supply and backlog fulfillment - Management confirmed improved resin supply and production rates, indicating they have enough resin to meet backlog demands [56] Question: Contribution of Radiant acquisition to revenue guidance - Management noted that Radiant's revenue contribution is relatively small but is expected to grow in 2023 [63] Question: Utilization rates and capacity expectations - Management anticipates a return to 70% to 80% utilization rates as capacity ramps up, with Kingston facility contributing additional capacity [75] Question: Sustainability of pool demand post-pandemic - Management expressed confidence in sustained strong demand for pools, driven by consumer education and market conversion trends [81] Question: Confidence in achieving fiberglass penetration targets - Management remains optimistic about reaching a 25% penetration rate for fiberglass pools by 2023, with plans to double the fiberglass business in the next few years [82]

Financial Data and Key Metrics Changes - Latham reported record sales in Q3 2021, achieving net sales growth of 27% to $162 million compared to the prior year [6][35] - Adjusted EBITDA grew 2.7% to $36.1 million, with a decrease in adjusted EBITDA margin to 22.3% [7][40] - Gross profit increased by 1.4% to $51 million, but gross margin decreased to 31.5% from 39.5% year-over-year, reflecting 800 basis points of compression [36][37] Business Line Data and Key Metrics Changes - Net sales for in-ground pools, including fiberglass products, increased 7.6% to $84.1 million [35] - Sales for covers increased 71.7% to $44.1 million, and liners increased 42.4% to $33.8 million [35] - Fiberglass products accounted for about two-thirds of the gross margin compression due to lower sales and a less profitable sales mix [37] Market Data and Key Metrics Changes - Demand for fiberglass pools has outpaced supply since early 2020, with significant order backlogs extending into 2022 [17][18] - The company expects to sell every pool it can produce well into 2022, driven by strong consumer interest and a growing order book [49] Company Strategy and Development Direction - Latham aims to position itself as a household lifestyle brand, evolving the pool buying experience and driving material conversion from concrete to fiberglass [8] - The company is expanding its fiberglass manufacturing capacity, with plans to break ground on a new plant in Kingston, Canada, which will be the largest in its history [31][21] - Strategic initiatives include enhancing digital marketing efforts and improving lead qualification processes to drive sales [28][30] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in regaining margin trajectory through pricing actions and improved resin supply, anticipating strong revenue and adjusted EBITDA growth in 2022 [49][50] - The company is actively working to mitigate raw material shortages and improve production efficiency [10][14] Other Important Information - The company reported a net loss of $11.3 million for Q3 2021, primarily due to noncash stock-based compensation expenses [41] - Capital expenditures increased to $6.2 million in Q3 2021, reflecting investments in fiberglass capacity expansion [44] Q&A Session Summary Question: How safe is the backlog in terms of preventing customer dropouts? - Management indicated that the likelihood of cancellations is very low, as customers have been waiting for their pools for extended periods and have confirmed contracts with dealers [55][56] Question: Can you elaborate on pricing changes for long-dated orders? - Management discussed implementing more dynamic pricing strategies, including flexibility in contracts and surcharges to adapt to inflation [58][59] Question: What is the current resin availability situation? - Management noted that resin availability has improved compared to previous months, with new sources coming online and upstream vendor situations improving [66][67] Question: How do you expect margins to progress in Q4 and 2022? - Management anticipates alleviation of gross margin compression in Q4 due to improved resin supply and production efficiency, with expectations for better margins in 2022 [72][76] Question: Are there plans to slow down new order growth? - Management confirmed that they have not slowed down on any front and continue to add capacity to meet strong demand [82] Question: How are dealers responding to the new pricing environment? - Management emphasized that dealers are experienced and have adapted to the new pricing dynamics, maintaining open communication to navigate challenges [102][106]

Financial Data and Key Metrics Changes - In Q2 2021, net sales increased by 60.3% year-over-year to $180.9 million, driven by strong consumer demand and order volume [11][30] - Adjusted EBITDA grew by 29.5% to $42.8 million, while the adjusted EBITDA margin decreased to 23.7% due to gross margin compression [11][37] - The net loss for Q2 was $53.6 million, or a loss of $0.49 per share, compared to a net income of $16.4 million, or $0.17 per share, in Q2 2020 [37] Business Line Data and Key Metrics Changes - Net sales for in-ground pools increased by 73.8% to $108 million, covers increased by 55.9% to $26.2 million, and liners increased by 37.8% to $46.7 million [30] - For the first half of fiscal 2021, net sales increased by 101.1% to $329.6 million, with in-ground pools up 120.2% to $201.6 million [38] Market Data and Key Metrics Changes - The company was added to the U.S. small-cap Russell 2000 Index on June 28, enhancing visibility within the investment community [12] - The demand for pools remains strong, with homeowners continuing to invest in outdoor living spaces [21] Company Strategy and Development Direction - The company is focused on driving material conversion to fiberglass pools, aiming for fiberglass to represent 25% of the U.S. residential in-ground pool market by 2023 [20] - A new 170,000 square foot fiberglass manufacturing facility is planned in Kingston, Ontario, to enhance capacity and meet growing demand [18][19] - The company is enhancing its digital and brand initiatives to improve consumer engagement and streamline the pool buying process [13][14] Management's Comments on Operating Environment and Future Outlook - Management acknowledged challenges from material inflation and raw material shortages but expressed confidence in navigating these issues through price increases and productivity initiatives [25][26] - The outlook for the full year has been raised, with expected revenue between $600 million and $620 million, reflecting strong first-half results and ongoing consumer demand [46] Other Important Information - Selling, general and administrative expenses increased significantly due to non-cash stock-based compensation and the acquisition of GLI [35] - The company plans to open a world-class training center to support dealer education and productivity [24] Q&A Session Summary Question: Is there conservatism in the revenue outlook for the second half? - Management indicated that strong comparisons from the previous year and supply chain challenges are factors in the revenue outlook [54][55] Question: What is the expectation for material deflation? - Management does not foresee material deflation in the near future, expecting prices to remain elevated [57] Question: How is the capacity and backlog situation? - The company is not sold out for 2021 and has plenty of capacity, with ongoing investments to stay ahead of demand [64] Question: When will the company be price cost neutral? - Management aims to have price exceed costs, with expectations for improvement in margins as price increases take effect [72] Question: How have raw material shortages impacted sales? - Some revenue has been missed due to intermittent shortages, but the impact is considered minimal [78] Question: What are the labor pressures affecting the business? - The company has been successful in hiring and increasing wages to meet market demands, which has helped boost output [84] Question: What is the strategy for dealer partners to increase installation capacity? - The company provides leads, training, and incentives to help dealers increase their capacity and efficiency [106]

Latham Group, Inc. (NASDAQ:SWIM) Q1 2021 Earnings Conference Call June 3, 2021 9:00 AM ET Company Participants Nicole Briguet - Investor Relations Scott Rajeski - President & Chief Executive Officer Mark Borseth - Chief Financial Officer Conference Call Participants Matthew Bouley - Barclays Josh Pokrzywinski - Morgan Stanley Susan Maklari - Goldman Sachs David Bellinger - Wolfe Research Tim Wojs - Baird Ken Zener - KeyBanc Capital Markets Keith Hughes - Truist Operator Good morning, everyone, and welcome t ...