Financial Data and Key Metrics Changes - Net sales for Q1 2025 were $111.4 million, slightly above $110.6 million in Q1 2024, reflecting positive momentum in fiberglass pools and auto covers [17] - Gross margin increased by 190 basis points to approximately 30% from 28% in the prior year, driven by lean manufacturing and value engineering initiatives [18][19] - SG&A expenses rose to $31 million, up from $26 million in Q1 2024, primarily due to strategic investments in sales and marketing [19] Business Line Data and Key Metrics Changes - Inbound pool sales were $58 million, down 4% from Q1 2024, impacted by soft industry conditions and adverse weather [18] - Cover sales increased by 18% to $32 million, benefiting from organic growth and acquisitions [18] - Liner sales decreased by 8% to $22 million compared to the previous year [18] Market Data and Key Metrics Changes - Fiberglass pools are expected to gain an additional 1% market share in the in-ground pool sector in 2025, driven by cost advantages and easier installation compared to concrete pools [6] - Labor scarcity is seen as a tailwind for fiberglass pools, with 46% of pool builders citing limited access to qualified labor as a significant issue [7] Company Strategy and Development Direction - The company is focusing on expanding its presence in Florida, Texas, Arizona, and California, which account for about two-thirds of annual new pool starts [13] - Key priorities include expanding the dealer base, targeting master plan communities, aligning product offerings with market demand, and targeted marketing campaigns [13] - The company aims to significantly increase its market share in the Sand States through strategic partnerships and new product launches [14] Management's Comments on Operating Environment and Future Outlook - Management expressed cautious optimism about the pool market, maintaining expectations for 2025 revenue growth of 8% at the midpoint [23] - The company anticipates continued progress in fiberglass awareness and adoption initiatives, supported by positive feedback from dealers and increased consumer engagement [22] - Management noted that the current business trends are encouraging, with a solid start to 2025 and expectations for higher year-on-year comparisons in the stronger second and third quarters [24] Other Important Information - The company announced the resignation of its Chief Commercial Officer, with confidence in the strength of its commercial team to continue executing the sales and marketing strategy [16] - Capital expenditures are expected to range between $27 million and $33 million in 2025, reflecting investments in new production modes and facility expansions [21] Q&A Session Summary Question: Outlook for margin expansion and SG&A leverage - Management indicated that SG&A leverage is expected to increase as year-over-year growth sets in, with sales projected to increase by about 8% [27] Question: Reaction to new molds and marketing efforts in Sand States - Management reported positive trends in sales and strong progress with builders in Florida, indicating an acceleration in market share gains [28][30] Question: Risks and opportunities in the fiberglass pool market - Management noted that while the decision to purchase a pool is a long-term process, they have not seen any slowdown in consumer interest or buying decisions [36][39] Question: Impact of tariffs on costs and pricing strategy - Management quantified the tariff headwind at approximately 350 to 400 basis points, with pricing increases aimed at mitigating the remaining impact [41][42] Question: Demand environment and consumer appetite for automatic safety covers - Management confirmed strong demand for auto covers, with high attachment rates on new pools and significant interest in safety features [75][72]

Financial Performance & Outlook - The company projects net sales for 2025 to be between $535 million and $565 million, representing a year-over-year growth of 8% at the midpoint[24] - Adjusted EBITDA for 2025 is projected to be between $90 million and $100 million, a 19% year-over-year increase at the midpoint[24] - Capital expenditures for 2025 are estimated to be between $27 million and $33 million[24] - In Q1 2025, Adjusted EBITDA was $11.139 million, with a margin of 10.0%, compared to $12.293 million and 11.1% in Q1 2024[38] - Net sales in Q1 2025 were $111.420 million compared to $110.629 million in Q1 2024[38] Market Position & Growth Strategy - The company holds the 1 market share in every subcategory in which it competes[7] - Fiberglass constitutes 75% of the company's in-ground pool sales, while packaged pools make up 25%[9] - Fiberglass accounts for 23% of total pool installs, up 600 bps since 2019[9] - Replacement sales account for 51% of the company's liners and covers sales[11] - The company estimates that approximately 180,000 to 200,000 vinyl liners are replaced annually in the U S[13]

[Financial & Operational Highlights](index=1&type=section&id=Financial%20%26%20Operational%20Highlights) Latham Group's Q1 2025 results met expectations, driven by strong fiberglass pool and autocover performance, gross margin expansion, and reaffirmed full-year guidance Q1 2025 Key Financial Metrics | Metric | Value | | :--- | :--- | | Net Sales | $111.4 million | | Net Loss | $6.0 million | | Net Loss per Diluted Share | $0.05 | | Adjusted EBITDA | $11.1 million | | Adjusted EBITDA Margin | 10.0% | - Gross margin expanded by **190 basis points**, driven by ongoing improvements from lean manufacturing and value engineering initiatives[4](index=4&type=chunk) - The company's "Sand State" expansion strategy, targeting Florida, Texas, Arizona, and California, is progressing as planned with active marketing and community engagement[3](index=3&type=chunk) - Full-year 2025 guidance is maintained, with midpoints projecting **8% sales growth** and **19% growth in Adjusted EBITDA**[4](index=4&type=chunk) [First Quarter 2025 Financial Results](index=2&type=section&id=First%20Quarter%202025%20Financial%20Results) Q1 2025 net sales rose slightly to **$111.4 million**, driven by Covers, with gross margin expanding despite increased SG&A [Profit and Loss Analysis](index=2&type=section&id=Profit%20and%20Loss%20Analysis) Net sales were boosted by a **17.6%** increase in Covers, improving gross margin to **29.5%**, despite higher SG&A Q1 Net Sales by Product Line (in thousands) | Product Line | Q1 2025 | Q1 2024 | Change (%) | | :--- | :--- | :--- | :--- | | In-ground Swimming Pools | $57,734 | $59,832 | -3.5% | | Covers | $31,611 | $26,868 | +17.6% | | Liners | $22,075 | $23,929 | -7.7% | | **Total** | **$111,420** | **$110,629** | **+0.7%** | Q1 2025 Key Performance Indicators vs. Q1 2024 | Metric | Q1 2025 | Q1 2024 | Change | | :--- | :--- | :--- | :--- | | Gross Profit | $32.9M | $30.6M | +7.5% | | Gross Margin | 29.5% | 27.7% | +190 bps | | SG&A Expenses | $30.6M | $26.3M | +16.6% | | Net Loss | ($6.0M) | ($7.9M) | Improved | | Adjusted EBITDA | $11.1M | $12.3M | -9.4% | | Adjusted EBITDA Margin | 10.0% | 11.1% | -110 bps | [Balance Sheet, Cash Flow, and Liquidity](index=2&type=section&id=Balance%20Sheet%2C%20Cash%20Flow%2C%20and%20Liquidity) Q1 ended with **$24.0 million** cash, **$306.9 million** total debt, and a **3.6x** net debt leverage ratio Key Balance Sheet & Liquidity Metrics (Q1 2025 End) | Metric | Value | | :--- | :--- | | Cash | $24.0 million | | Total Debt | $306.9 million | | Net Debt Leverage Ratio | 3.6x | | Net Cash Used in Operating Activities | $46.9 million | | Capital Expenditures | $3.5 million | [FY 2025 Outlook and Guidance](index=3&type=section&id=FY%202025%20Outlook%20and%20Guidance) Latham reaffirms FY2025 guidance, projecting **$535-565 million** net sales and **$90-100 million** Adjusted EBITDA FY 2025 Guidance Ranges | Metric | Low | High | | :--- | :--- | :--- | | Net Sales | $535 million | $565 million | | Adjusted EBITDA | $90 million | $100 million | | Capital Expenditures | $27 million | $33 million | - The company projects that 2025 new pool starts will be approximately in line with 2024 levels[14](index=14&type=chunk) - The company is actively managing risks from elevated tariffs, which affect **15-20%** of its raw material imports, through strategic pre-purchasing and recent targeted price increases[14](index=14&type=chunk) - Expected growth is primarily driven by category share gains in fiberglass pools and autocovers, along with contributions from the Coverstar Central acquisition and two smaller autocover dealer acquisitions[15](index=15&type=chunk) [Appendix: Financial Statements](index=8&type=section&id=Appendix%3A%20Financial%20Statements) This section presents the unaudited condensed consolidated financial statements for Q1 2025, including Statements of Operations, Balance Sheets, and Cash Flows [Condensed Consolidated Statements of Operations](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) Q1 2025 net sales were **$111.4 million**, gross profit **$32.9 million**, and net loss **$6.0 million**, an improvement from Q1 2024 Q1 2025 vs. Q1 2024 Statement of Operations (in thousands) | Line Item | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Net sales | $111,420 | $110,629 | | Gross profit | $32,881 | $30,589 | | Loss from operations | $(4,931) | $(2,073) | | Net loss | $(5,962) | $(7,864) | | Diluted net loss per share | $(0.05) | $(0.07) | [Condensed Consolidated Balance Sheets](index=9&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) As of March 29, 2025, total assets were **$824.6 million**, total liabilities **$443.4 million**, with cash at **$24.0 million** Balance Sheet Highlights (in thousands) | Account | March 29, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Cash | $23,966 | $56,398 | | Total current assets | $211,540 | $178,298 | | Total assets | $824,585 | $794,207 | | Total current liabilities | $83,025 | $70,977 | | Total liabilities | $443,443 | $406,985 | | Total stockholders' equity | $381,142 | $387,222 | [Condensed Consolidated Statements of Cash Flows](index=10&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Net cash used in operating activities was **$46.9 million** in Q1 2025, reflecting seasonal working capital demands Statement of Cash Flows Summary (in thousands) | Cash Flow Activity | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Net cash used in operating activities | $(46,882) | $(34,512) | | Net cash used in investing activities | $(8,386) | $(5,345) | | Net cash provided by (used in) financing activities | $22,493 | $(19,002) | | **Net decrease in cash** | **$(32,432)** | **$(58,951)** | | Cash at end of period | $23,966 | $43,811 | [Appendix: Non-GAAP Reconciliations](index=11&type=section&id=Appendix%3A%20Non-GAAP%20Reconciliations) This section reconciles non-GAAP financial measures, including Adjusted EBITDA from net loss and Net Debt Leverage Ratio [Adjusted EBITDA Reconciliation](index=11&type=section&id=Adjusted%20EBITDA%20Reconciliation) Q1 2025 Adjusted EBITDA was **$11.1 million**, reconciled from a **$6.0 million** net loss with various add-backs Reconciliation of Net Loss to Adjusted EBITDA (in thousands) | Line Item | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | **Net loss** | **$(5,962)** | **$(7,864)** | | Depreciation and amortization | 12,400 | 10,375 | | Interest expense, net | 6,371 | 4,982 | | Income tax (benefit) expense | (4,079) | 532 | | Stock-based compensation expense | 1,971 | 1,243 | | Other adjustments | 482 | 2,995 | | **Adjusted EBITDA** | **$11,139** | **$12,293** | [Net Debt Leverage Ratio](index=12&type=section&id=Net%20Debt%20Leverage%20Ratio) As of March 29, 2025, net debt was **$282.9 million**, resulting in a Net Debt Leverage Ratio of **3.6x** Net Debt Leverage Ratio Calculation (as of March 29, 2025, in thousands) | Metric | Value | | :--- | :--- | | Total Debt | $306,913 | | Less: Cash | $(23,966) | | **Net Debt** | **$282,947** | | LTM Adjusted EBITDA | $79,065 | | **Net Debt Leverage Ratio** | **3.6x** | [Supplementary Information](index=3&type=section&id=Supplementary%20Information) This section provides conference call details, company overview, non-GAAP measure definitions, and forward-looking statement disclaimers - Latham Group 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**[22](index=22&type=chunk) - The company uses non-GAAP measures like Adjusted EBITDA and Net Debt to supplement GAAP results, believing they provide a more complete analysis of core operating performance by excluding items such as depreciation, interest, taxes, and stock-based compensation[23](index=23&type=chunk)[24](index=24&type=chunk)[28](index=28&type=chunk) - Forward-looking statements are subject to significant risks, including economic conditions, consumer spending, trade policies, supply chain disruptions, and competition, which could cause actual results to differ materially[29](index=29&type=chunk) - A conference call to discuss the results was scheduled for May 6, 2025, at **4:30 PM Eastern Time**, with webcast details available on the company's investor relations website[18](index=18&type=chunk)[20](index=20&type=chunk)

Core Insights - Latham Group, Inc. reported first quarter 2025 net sales of $111.4 million, reflecting a slight increase of 0.7% compared to the same period last year, driven by strong performance in fiberglass pools and autocovers [4][7][29] - The company experienced a net loss of $6.0 million, an improvement from a net loss of $7.9 million in the prior year, indicating a narrowing net loss margin from 7.1% to 5.4% [9][10] - Latham maintains its full-year guidance for 2025, projecting an 8% growth in sales and a 19% increase in adjusted EBITDA at the midpoints, supported by strategic initiatives and market share gains [12][13] Financial Performance - Net sales for the first quarter of 2025 were $111.4 million, up from $110.6 million in the prior year's first quarter [4][29] - Gross profit increased to $32.9 million, a rise of 7.5% from $30.6 million year-over-year, with a gross margin expansion of 190 basis points to 29.5% [4][10] - Adjusted EBITDA for the first quarter was $11.1 million, down 9.4% from $12.3 million in the previous year, with an adjusted EBITDA margin of 10.0% [10][38] Product Line Performance - In-ground swimming pools generated $57.7 million in sales, down from $59.8 million in the prior year [6][29] - Covers sales increased to $31.6 million from $26.9 million, while liners sales decreased to $22.1 million from $23.9 million [6][29] Strategic Initiatives - The company is executing a Sand State expansion strategy aimed at increasing market share in Florida, Texas, Arizona, and California, which are key regions for new pool installations [3][7] - Latham's "GOOTSA" advertising campaign is active in targeted states to enhance consumer awareness and drive sales [3][7] Cost Management - Selling, general, and administrative expenses rose to $30.6 million, an increase of 16.6% from the previous year, primarily due to investments in sales and marketing [8][10] - Lean manufacturing and value engineering initiatives contributed to a 190-basis point increase in gross margin, helping to offset rising SG&A costs [4][10] Balance Sheet and Cash Flow - As of the end of the first quarter, Latham had cash of $24.0 million and total debt of $306.9 million, resulting in a net debt leverage ratio of 3.6 [11][42] - Net cash used in operating activities was $46.9 million, consistent with seasonal working capital requirements [11][35]

Core Insights - Latham, The Pool Company emphasizes the importance of pool safety as summer approaches, collaborating with Bode Miller to promote essential safety tips during National Water Safety Month [1][2][3] Company Overview - Latham Group, Inc. is the largest designer, manufacturer, and marketer of in-ground residential swimming pools and accessories in North America, Australia, and New Zealand, with over 60 years of experience and operations across 24 locations [5] Safety Initiatives - The company is committed to educating homeowners on creating a secure pool environment, highlighting the significance of safety measures to prevent accidents [3][4] - Bode Miller's personal experience with drowning has motivated him to raise awareness about pool safety, underscoring the need for proactive measures such as swim lessons and automatic pool covers [2] Safety Tips - Five essential water safety tips provided by Latham include: 1. Never leave children unattended near pools [7] 2. Teach kids to swim, as formal lessons can reduce drowning risk by 88% [7] 3. Install an automatic safety cover to create a secure barrier [7] 4. Educate all household members on water safety rules [7] 5. Be prepared for emergencies with safety equipment and knowledge of CPR [7]

Group 1 - Latham Group (SWIM) shares increased by 14.6% to close at $5.73, following President Trump's announcement to suspend U.S. tariffs for 90 days, which renewed investor optimism [1] - The stock had previously experienced a 31.1% loss over the past four weeks, indicating a significant recovery in the latest trading session [1] - The upcoming quarterly report for Latham Group is expected to show a loss of $0.04 per share, reflecting a year-over-year change of +42.9%, with revenues projected at $112 million, up 1.2% from the previous year [2] Group 2 - The consensus EPS estimate for Latham Group has remained unchanged over the last 30 days, suggesting that the stock's price movement may not sustain without trends in earnings estimate revisions [3] - Latham Group holds a Zacks Rank of 2 (Buy), indicating positive market sentiment towards the stock [3] - In the same industry, Aspen Aerogels (ASPN) closed 9.8% higher at $5.51, but has seen a -32.4% return over the past month, highlighting volatility within the sector [3]

Core Viewpoint - Latham Group, Inc. will release its financial results for the first quarter of 2025 on May 6, 2025, after the U.S. market closes, followed by a conference call to discuss the results [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 [4]. - The company operates with approximately 1,850 employees across 30 locations [4]. Conference Call Details - Participants are encouraged to pre-register for the conference call, which will take place on May 6, 2025, at 4:30 PM Eastern Time [2]. - A live audio webcast of the conference call will be available online, and an archived version will be accessible approximately two hours after the call [3]. - Dial-in options are provided for participants, including a toll-free number for U.S. callers and an international dial-in number [3].

Latham Group (SWIM) appears an attractive pick, as it has been recently upgraded to a Zacks Rank #2 (Buy). This rating change essentially reflects an upward trend in earnings estimates -- one of the most powerful forces impacting stock prices.A company's changing earnings picture is at the core of the Zacks rating. The system tracks the Zacks Consensus Estimate -- the consensus measure of EPS estimates from the sell-side analysts covering the stock -- for the current and following years.Since a changing ear ...

Company Overview - Latham Group, Inc. is a significant player in the design, manufacturing, and sale of in-ground residential pools and related products [1] - The company has established a strong presence in North America, Australia, and New Zealand over several decades [1] Research Principles - Grassroots Trading focuses on providing objective and unbiased research, emphasizing data-driven insights without emotional influences [2] - The research targets small- to mid-cap companies while also identifying opportunities in large- and mega-cap companies to cover the dynamic equity markets comprehensively [2]

Strategic Acquisitions and Growth - Latham has made five strategic acquisitions since 2019, including the purchase of CoverStar Central in August 2024 and Radiant Pools in November 2021, to expand its portfolio of outdoor living products[72]. - The company anticipates continued growth in the fiberglass pool market as consumers shift from concrete to fiberglass pools, which require less maintenance and shorter installation times[68]. - Latham Pool Products acquired Coverstar Central, LLC for a total consideration of $71.5 million, including $66.5 million in cash and $4.9 million in non-cash settlements[444]. - The acquisition resulted in the recognition of $22.0 million in goodwill, attributed to vertical integration and expanded market share[447]. - Coverstar Central contributed net sales of $8.236 million and a net loss of $1.332 million from the acquisition date through December 31, 2024[448]. Sales and Revenue Performance - Net sales for 2024 were $508,520, a decrease of 10.2% from $566,492 in 2023 and a decline of 26.9% from $695,736 in 2022[365]. - For the year ended December 31, 2024, the company's net sales were $520.795 million, down from $586.717 million in 2023[450]. - Net sales for in-ground swimming pools were $259,214,000 in 2024, down from $297,828,000 in 2023, a decrease of about 12.9%[497]. Financial Position and Assets - As of December 31, 2024, total assets decreased to $794.2 million from $835.0 million in 2023, reflecting a decline of approximately 4.9%[363]. - Cash reserves dropped significantly from $102.8 million in 2023 to $56.4 million in 2024, a decrease of about 45%[363]. - The carrying amount for the equity method investment in Premier Pools & Spas was $24.9 million as of December 31, 2024, down from $25.9 million in 2023[457]. - As of December 31, 2024, the company's intangible assets net amounted to $292.913 million, with trade names and trademarks valued at $111.325 million[469]. Profitability and Losses - The net loss for 2024 was $(17,860), compared to a net loss of $(2,388) in 2023 and $(5,694) in 2022, indicating a significant increase in losses[368]. - The company recorded a net loss of $12.634 million for the year ended December 31, 2024, compared to a net income of $4.380 million in 2023[450]. - The company reported a total loss before income taxes of $(8,740,000) in 2024, compared to a loss of $(10,060,000) in 2023, indicating an improvement of approximately 13.1%[498]. Debt and Financing - Long-term debt remained relatively stable at $278.3 million in 2024, down slightly from $280.0 million in 2023[363]. - The company has outstanding borrowings of $288.1 million under its Term Loan as of December 31, 2024, with no borrowings on the Revolving Credit Facility[347]. - The effective interest rate on the term loan was 8.61% as of December 31, 2024, including the impact of the company's interest rate swap[484]. Operational Efficiency and Costs - The company spent $20,116 on property and equipment in 2024, down from $33,189 in 2023[373]. - Total lease expense decreased to $10,772,000 in 2024 from $11,824,000 in 2023, representing a decline of approximately 8.9%[495]. - The company recorded aggregate losses on sales and disposals of property and equipment of $0.1 million in 2024, compared to $0.3 million in 2023[473]. Employee and Operational Metrics - As of December 31, 2024, Latham employed 1,817 full-time employees, with 142 based outside North America[73]. - The company recognized expenses related to employee benefit plans of $1.5 million, $1.4 million, and $1.7 million for the years ended December 31, 2024, 2023, and 2022, respectively[429]. Marketing and Consumer Engagement - Latham's digital marketing strategy has generated significant consumer demand, with ongoing investments aimed at positioning the brand as the preferred choice for homeowners[61]. - The company has developed the Latham Augmented Reality Pool Visualizer app, enhancing consumer engagement and facilitating the pool buying process[63]. Risk Management and Compliance - The company has implemented a comprehensive health and safety program, regularly monitoring its total recordable incident rate to ensure workplace safety[79]. - The company has published annual ESG reports since 2022 to update stakeholders on its progress in managing environmental, social, and governance risks and opportunities[87]. - The company does not currently hedge its foreign currency risk, with significant exposure to the Australian and Canadian dollars[353].