[Overview of Q2 2025 Performance](index=1&type=section&id=Latham%20Group%2C%20Inc.%20Reports%20Second%20Quarter%202025%20Financial%20Results) [Financial Highlights](index=1&type=section&id=Financial%20Highlights) Latham Group reported strong financial results for the second quarter and first six months of 2025, highlighted by net sales growth, significant gross margin expansion, and a double-digit increase in Adjusted EBITDA for the quarter Q2 2025 Financial Highlights | Metric | Value | | :--- | :--- | | Net Sales | $172.6 million | | Net Income | $16.0 million | | Net Income per Diluted Share | $0.13 | | Adjusted EBITDA | $39.9 million | | Adjusted EBITDA Margin | 23.1% | Six Months 2025 Financial Highlights | Metric | Value | | :--- | :--- | | Net Sales | $284.1 million | | Net Income | $10.0 million | | Net Income per Diluted Share | $0.08 | | Adjusted EBITDA | $51.0 million | | Adjusted EBITDA Margin | 18.0% | - The company reconfirmed its full-year guidance, which includes midpoints of **8% net sales growth** and **19% Adjusted EBITDA growth**[4](index=4&type=chunk) [Management Commentary](index=1&type=section&id=Management%20Commentary) The CEO attributed strong Q2 performance to successful execution of key strategies, including driving fiberglass pool and autocover adoption, expanding in Sand State markets, and improving margins through operational efficiencies and acquisitions - Strategic focus areas include driving awareness and adoption of fiberglass pools and autocovers, expanding in Sand State markets, and improving margins through lean manufacturing and acquisitions[2](index=2&type=chunk) - Fiberglass pool sales are projected to be about **75%** of the company's full-year 2025 in-ground pool sales, with a significant number of new dealers added in the Sand States[3](index=3&type=chunk) - Autocover sales increased by **46%** in Q2, driven by organic growth and the acquisition of Coverstar businesses, while liner sales also grew by **6%** year-over-year[5](index=5&type=chunk) - Gross margin expanded by **400 basis points** to **37.1%** due to higher volumes, lean manufacturing initiatives, and recent acquisitions, with Adjusted EBITDA margin growing by **160 basis points** to **23.1%**[6](index=6&type=chunk) [Detailed Financial Results](index=2&type=section&id=Detailed%20Financial%20Results) [Second Quarter 2025 Results](index=2&type=section&id=Second%20Quarter%202025%20Results) In Q2 2025, Latham Group's net sales increased 7.8% year-over-year to $172.6 million, driven by both organic and acquisition-related growth, with gross profit rising 20.6% to $64.0 million, and net income growing to $16.0 million [Overall Performance](index=2&type=section&id=Q2%20Overall%20Performance) The company achieved broad-based growth in Q2 2025, with a 7.8% increase in net sales and a 20.6% rise in gross profit, while net income and Adjusted EBITDA saw significant year-over-year growth of 20.3% and 15.7% respectively Q2 2025 vs Q2 2024 Performance | Metric | Q2 2025 | Q2 2024 | % Change | | :--- | :--- | :--- | :--- | | Net Sales | $172.6M | $160.1M | +7.8% | | Gross Profit | $64.0M | $53.0M | +20.6% | | Gross Margin | 37.1% | 33.1% | +400 bps | | SG&A Expenses | $31.9M | $26.6M | +20.1% | | Net Income | $16.0M | $13.3M | +20.3% | | Adjusted EBITDA | $39.9M | $34.5M | +15.7% | | Adjusted EBITDA Margin | 23.1% | 21.5% | +160 bps | - The increase in Selling, general, and administrative (SG&A) expenses was primarily driven by investments in marketing for the Sand State strategy, a new ERP system, and the inclusion of Coverstar Central[10](index=10&type=chunk) [Net Sales by Product Line](index=2&type=section&id=Q2%20Net%20Sales%20by%20Product%20Line) In the second quarter, sales growth was led by the Covers segment, which increased 46.0% year-over-year, and the Liners segment, which grew 6.0%, while sales for In-ground Swimming Pools experienced a slight decline of 2.9% Q2 Net Sales by Product Line (in thousands) | Product Line | Q2 2025 | Q2 2024 | % Change | | :--- | :--- | :--- | :--- | | In-ground Swimming Pools | $78,601 | $80,958 | -2.9% | | Covers | $37,245 | $25,503 | +46.0% | | Liners | $56,793 | $53,661 | +6.0% | | **Total** | **$172,639** | **$160,122** | **+7.8%** | [Six Months 2025 Results](index=3&type=section&id=Six%20Months%202025%20Results) For the first six months of 2025, net sales grew 4.9% to $284.1 million, gross margin expanded by 320 basis points to 34.1%, and net income nearly doubled to $10.0 million, with Adjusted EBITDA increasing by 9.1% to $51.0 million Six Months 2025 vs 2024 Performance | Metric | H1 2025 | H1 2024 | % Change | | :--- | :--- | :--- | :--- | | Net Sales | $284.1M | $270.8M | +4.9% | | Gross Profit | $96.8M | $83.6M | +15.8% | | Gross Margin | 34.1% | 30.9% | +320 bps | | Net Income | $10.0M | $5.4M | +85.2% | | Adjusted EBITDA | $51.0M | $46.8M | +9.1% | | Adjusted EBITDA Margin | 18.0% | 17.3% | +70 bps | - Similar to the quarterly results, the six-month increase in SG&A expenses was primarily due to investments in the Sand State strategy, a new ERP system, and the inclusion of Coverstar Central[15](index=15&type=chunk) [Balance Sheet, Cash Flow, and Liquidity](index=3&type=section&id=Balance%20Sheet%2C%20Cash%20Flow%2C%20and%20Liquidity) As of Q2 2025, Latham Group reported **$26.9 million** in cash, **$281.5 million** in total debt with a **3.0** net debt leverage ratio, and generated **$36.0 million** in operating cash flow for the quarter - Ended Q2 2025 with **$26.9 million** in cash[17](index=17&type=chunk) - Total debt stood at **$281.5 million**, with a net debt leverage ratio of **3.0**[18](index=18&type=chunk) - Net cash provided by operating activities was **$36.0 million** in Q2 2025[17](index=17&type=chunk) - Capital expenditures were **$6.8 million** in Q2 2025 and **$10.3 million** for the first half of the year[18](index=18&type=chunk) [Business Outlook](index=4&type=section&id=Business%20Outlook) [Summary and Outlook](index=4&type=section&id=Summary%20and%20Outlook%20Narrative) Management expressed confidence in outperforming the market and reaffirmed full-year 2025 guidance, projecting growth through market share gains in fiberglass pools, autocovers, and liners, supported by competitive advantages and recent acquisitions despite an estimated 60,000 new U.S. pool starts - The company continues to project approximately **60,000** new U.S. pool starts in 2025, consistent with original estimates[19](index=19&type=chunk) - Guidance for **8% net sales growth** and **19% Adjusted EBITDA growth** (at midpoints) is driven by expected category share gains and contributions from the Coverstar Central acquisition[19](index=19&type=chunk) - Key competitive advantages cited include high-quality products, the industry's largest manufacturing footprint, and a strong network of dealers and contractors[20](index=20&type=chunk) [Full-Year 2025 Guidance](index=4&type=section&id=FY%202025%20Guidance%20Ranges) Latham Group reaffirmed its full-year 2025 financial guidance, projecting net sales in the range of $535 million to $565 million and Adjusted EBITDA between $90 million and $100 million, with capital expenditures expected to be between $27 million and $33 million FY 2025 Guidance | Metric | Low | High | | :--- | :--- | :--- | | Net Sales | $535 million | $565 million | | Adjusted EBITDA | $90 million | $100 million | | Capital Expenditures | $27 million | $33 million | [Appendix: Financial Statements and Reconciliations](index=9&type=section&id=Appendix%3A%20Financial%20Statements%20and%20Reconciliations) [Condensed Consolidated Statements of Operations](index=9&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) The income statement reflects year-over-year increases in net sales and gross profit for both Q2 and the first six months of 2025, with net income rising to $16.0 million in Q2 and $10.0 million for the six-month period Condensed Consolidated Statements of Operations (in thousands) | | Fiscal Quarter Ended | Two Fiscal Quarters Ended | | :--- | :--- | :--- | | | **June 28, 2025** | **June 29, 2024** | **June 28, 2025** | **June 29, 2024** | | **Net sales** | **$172,639** | **$160,122** | **$284,059** | **$270,751** | | Gross profit | $63,963 | $53,022 | $96,844 | $83,611 | | Income from operations | $24,724 | $20,006 | $19,793 | $17,933 | | **Net income** | **$15,980** | **$13,279** | **$10,018** | **$5,415** | | Diluted EPS | $0.13 | $0.11 | $0.08 | $0.05 | [Condensed Consolidated Balance Sheets](index=10&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) As of June 28, 2025, the balance sheet reported total assets of $822.1 million, total liabilities of $423.7 million, a decrease in cash to $26.9 million, and an increase in total stockholders' equity to $398.4 million Key Balance Sheet Items (in thousands) | Account | June 28, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Cash | $26,943 | $56,398 | | Total current assets | $214,368 | $178,298 | | **Total assets** | **$822,142** | **$794,207** | | Total current liabilities | $89,868 | $70,977 | | Long-term debt, net | $278,243 | $278,271 | | **Total liabilities** | **$423,714** | **$406,985** | | **Total stockholders' equity** | **$398,428** | **$387,222** | [Condensed Consolidated Statements of Cash Flows](index=11&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) For the first six months of 2025, net cash used in operating activities was $10.9 million, a reversal from the prior year, leading to a $29.5 million decrease in the company's cash balance Six Months Ended Cash Flow Summary (in thousands) | Cash Flow Activity | June 28, 2025 | June 29, 2024 | | :--- | :--- | :--- | | Net cash (used in) provided by operating activities | $(10,905) | $17,911 | | Net cash used in investing activities | $(15,278) | $(9,833) | | Net cash used in financing activities | $(3,580) | $(20,005) | | **Net decrease in cash** | **$(29,455)** | **$(11,995)** | | Cash at end of period | $26,943 | $90,768 | [Non-GAAP Reconciliations](index=12&type=section&id=Non-GAAP%20Reconciliations) This section provides detailed reconciliations for the non-GAAP financial measures used in the report, specifically Adjusted EBITDA and the Net Debt Leverage Ratio, bridging them to the most directly comparable GAAP figures [Adjusted EBITDA Reconciliation](index=12&type=section&id=Adjusted%20EBITDA%20Reconciliation) Adjusted EBITDA for Q2 2025 was $39.9 million and $51.0 million for the first six months, reconciled from net income by adjusting for items such as depreciation, interest, and stock-based compensation Adjusted EBITDA Reconciliation Summary (in thousands) | | Q2 2025 | Q2 2024 | H1 2025 | H1 2024 | | :--- | :--- | :--- | :--- | :--- | | **Net income** | **$15,980** | **$13,279** | **$10,018** | **$5,415** | | Depreciation and amortization | $12,697 | $10,593 | $25,097 | $20,967 | | Interest expense, net | $7,149 | $6,013 | $13,520 | $10,995 | | Income tax expense | $5,130 | $442 | $1,051 | $974 | | Stock-based compensation | $1,381 | $2,100 | $3,352 | $3,343 | | Other adjustments | $(1,425) | $2,150 | $(951) | $5,075 | | **Adjusted EBITDA** | **$39,887** | **$34,478** | **$51,027** | **$46,770** | | **Adjusted EBITDA margin** | **23.1%** | **21.5%** | **18.0%** | **17.3%** | [Net Debt Leverage Ratio](index=13&type=section&id=Net%20Debt%20Leverage%20Ratio) As of June 28, 2025, the company's Net Debt was calculated at $254.6 million, resulting in a Net Debt Leverage Ratio of 3.0 based on a Last Twelve Months (LTM) Adjusted EBITDA of $84.5 million Net Debt Leverage Ratio Calculation (as of June 28, 2025, in thousands) | Metric | Value | | :--- | :--- | | Total Debt | $281,493 | | Less: Cash | $(26,943) | | **Net Debt** | **$254,550** | | LTM Adjusted EBITDA | $84,476 | | **Net Debt Leverage Ratio** | **3.0** |

Financial Performance - Latham Group reported net sales of $172.6 million for Q2 2025, an increase of $12.5 million or 7.8% from $160.1 million in Q2 2024, driven by both organic and acquisition-related growth [6][7] - Gross profit for Q2 2025 was $64.0 million, up 20.6% from $53.0 million in the prior year, with a gross margin expansion of 400 basis points to 37.1% [9][10] - Net income for Q2 2025 was $16.0 million, or $0.13 per diluted share, compared to $13.3 million, or $0.11 per diluted share in Q2 2024 [11][12] Product Line Performance - In-ground swimming pools generated $78.6 million in sales for Q2 2025, a slight decrease from $80.9 million in Q2 2024, while covers sales increased by 46% to $37.2 million [9][10] - Liner sales grew by 6% year-over-year, contributing to the overall growth in Q2 [4][9] - Fiberglass pools are projected to represent approximately 75% of the company's full-year 2025 in-ground pool sales, supported by targeted marketing initiatives [3][4] Strategic Initiatives - The company is focusing on increasing awareness and adoption of fiberglass pools and autocovers, particularly in the Sand State markets, which has led to a significant increase in dealer additions [2][3] - Marketing campaigns have successfully driven substantial increases in website traffic and consumer engagement in key target locations [3][4] - The acquisition of Coverstar businesses has contributed to the growth in autocover sales and overall market presence [4][5] Margin and Expense Management - Adjusted EBITDA for Q2 2025 was $39.9 million, reflecting a 15.7% increase from $34.5 million in Q2 2024, with an adjusted EBITDA margin of 23.1% [12][16] - Selling, general, and administrative expenses rose to $31.9 million, primarily due to increased marketing and personnel investments related to the Sand State strategy [10][15] Outlook and Guidance - The company reaffirms its full-year guidance of 8% net sales growth and 19% adjusted EBITDA growth at the midpoints, driven by category share gains in fiberglass pools, autocovers, and liners [19][22] - Latham anticipates approximately 60,000 new U.S. pool starts in 2025, aligning with original estimates despite challenging market conditions [19][20]

Core Insights - Latham Group, Inc. has appointed Jeffrey J. Jackson as an independent member of its Board of Directors and as a member of the Audit Committee, increasing the board size from eight to nine directors [1][2]. Group 1: Appointment Details - Jeffrey J. Jackson is currently the CEO of Cabinetworks Group, Inc., the largest privately-owned kitchen cabinet manufacturer in the U.S. [2] - Jackson has a notable background, having served as President and CEO of PGT Innovations, Inc., where he led the company to significant growth and national brand recognition in the fenestration industry [2][3]. - His previous executive roles include positions at The Hershey Company, Mrs. Smith's Bakeries, and The Coca-Cola Company, showcasing a diverse experience across various sectors [2]. Group 2: Board Commentary - James C. Cline, Chairman of the Latham Board, expressed enthusiasm about Jackson's appointment, highlighting his visionary leadership and extensive expertise in executive management and finance [3]. - Cline noted that Jackson's broad sector knowledge and industry relationships will provide valuable operational and strategic experience to support Latham's growth and competitive positioning [3]. Group 3: 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, indicating a robust operational platform [4].

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] Financial Results Announcement - Latham Group will release its financial results for the second quarter of 2025 on August 5, 2025, after the close of the U.S. market [1] - A conference call to discuss the results will take place on the same day at 4:30 PM Eastern Time [1] Conference Call Details - Participants are encouraged to pre-register for the conference call via a provided link [2] - A live audio webcast of the conference call will be available online [3] - For those unable to listen live, an archived webcast will be accessible approximately two hours after the call, lasting until August 5, 2026 [3]

Core Insights - The article emphasizes the positive impact of backyard swimming pools on children's physical, social, and emotional well-being, particularly in reducing screen time and encouraging outdoor activity [1][4][8] Group 1: Screen Time Reduction - Research indicates that American adolescents spend excessive time on screens, with children aged 8 to 12 averaging 4 to 6 hours daily, and teenagers up to 9 hours [1] - Nearly 50% of surveyed pool owner parents reported a noticeable decrease in their children's screen time after installing a swimming pool [4] - Approximately 65% of respondents found it easier to get their kids to disconnect from screens without conflict after having a pool [4] Group 2: Increased Outdoor Activity - 100% of survey participants noted that their children showed increased interest in outdoor activities after acquiring a swimming pool [5] - About 90% of pool owners observed that their children became more physically active post-installation, with over 20% stating their kids became "a lot more active" [5] Group 3: Social and Emotional Benefits - Nearly 80% of mothers reported that their children became more social, spending more time with friends and neighbors after getting a pool [6] - 35% of respondents noted a decrease in complaints about boredom, indicating enhanced social interactions [6] Group 4: Family Connection - 68% of respondents indicated they spent more quality time together as a family since adding a pool, with "family fun and bonding" being the primary reason for pool installation [7] - Survey participants reported using their pools daily or multiple times per week, with approximately 35% using it every day [7] Group 5: 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 over 60 years of experience [10] - The company offers a wide range of pool products, including fiberglass and vinyl liner pools, plunge pools, and safety covers, aimed at providing high quality and value to homeowners [10]

Core Viewpoint - Latham Group (SWIM) has received a Zacks Rank 2 (Buy) upgrade, indicating a positive outlook on its earnings estimates, which is a significant factor influencing stock prices [1][3]. Earnings Estimates and Stock Performance - The Zacks rating system emphasizes the importance of earnings estimate revisions, which are strongly correlated with stock price movements, particularly due to institutional investors' reliance on these estimates for valuation [4][6]. - For Latham Group, the recent upgrade reflects an improvement in the company's underlying business, suggesting that investor sentiment may lead to increased stock prices [5][10]. Earnings Estimate Revisions - For the fiscal year ending December 2025, Latham Group is projected to earn $0.11 per share, consistent with the previous year's figure, while the Zacks Consensus Estimate has risen by 75% over the past three months [8]. Zacks Rank System - The Zacks Rank system categorizes stocks based on earnings estimate revisions, with only the top 20% of stocks receiving a "Strong Buy" or "Buy" rating, indicating superior potential for market-beating returns [9][10].

Summary of Latham's Conference Call Company Overview - Latham is a leading producer of inground residential pools, specializing in fiberglass pools, vinyl liners, and pool covers [2][4] - The company is the largest manufacturer of inground swimming pools in North America, Australia, and New Zealand [4] Industry Insights - Fiberglass pools are gaining market share over concrete pools due to lower costs and faster installation [2][12] - The U.S. market for inground pools is currently at 62,000 pools sold in 2024, with expectations of a flat market in 2025 [15][42] - Fiberglass pools represent 23% of all pools installed in the U.S., a number that has increased from 16% in 2019 [14][48] - The company holds a 50% market share in the fiberglass category and is the market leader in other categories with shares of 30-40% [6][7] Growth Strategies - Focus on expanding market share in the "sand states" (Florida, Texas, Arizona, California) where fiberglass pools are underrepresented [4][8] - Strategic priorities include increasing customer awareness, expanding the dealer base, and tailoring products to regional market needs [9][24][30] - The company aims to increase fiberglass pool adoption in the sand states, leveraging demographic similarities to Australia, where fiberglass pools hold a 70% market share [23][24] Financial Performance - The company has implemented restructuring projects to improve operating efficiencies and reduce costs [5][41] - Guidance for 2025 includes an 8% increase in net sales, driven by organic growth and contributions from recent acquisitions [42][43] - EBITDA is projected to increase by 19% compared to 2024, with a target of $95 million in EBITDA for 2025 [44] Market Dynamics - The company has seen a consistent annual conversion rate of 100 basis points towards fiberglass pools [48] - Tariffs are expected to create a $20 million headwind in 2025, but the company has mitigated some of this impact through supply chain strategies and price increases [50][51] - There are no significant cancellations or delays reported, as current installations are based on long-term decisions made by cash buyers [52] Key Takeaways - Latham is well-positioned for growth in the fiberglass pool market, particularly in underrepresented regions - The company is actively managing costs while pursuing strategic growth initiatives - Financial projections indicate a strong outlook for the coming years, despite market challenges and external pressures like tariffs [41][44]

Market Position and Strategy - Latham is the largest manufacturer of in-ground swimming pools in North America, Australia, and New Zealand[6] - The company holds the number one share in every subcategory in which it competes[8] - A key strategic priority is accelerating fiberglass share gain in the Sand States[20] - The company aims to outperform the market and achieve significant long-term growth in Net Sales & Adjusted EBITDA[20] Product Portfolio and Market Share - In-Ground Swimming Pools account for 51% of net sales, Liners 23%, and Covers 26%[8] - Fiberglass constitutes 75% of Latham's fiberglass pool sales, while Packaged Pools make up 25%[10] - Latham holds approximately 50% share of the fiberglass category in North America[9] - Replacement sales account for 51% of Liners & Covers sales[12] Financial Outlook - The company's full year 2025 outlook projects net sales between $535 million and $565 million, representing 8% year-over-year growth at the midpoint[49] - Adjusted EBITDA for 2025 is projected to be between $90 million and $100 million, a 19% year-over-year increase at the midpoint[49]

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 [1] - The company is headquartered in Latham, NY, and operates with approximately 1,850 employees across around 30 locations [1] Upcoming Investor Conferences - On June 3, 2025, the President and CEO, Scott Rajeski, and CFO, Oliver Gloe, will host investor meetings at the Stifel 2025 Cross Sector Insight Conference in Boston, MA [2] - On June 4, 2025, Scott Rajeski and Chris Daley, VP of Finance, will participate in a fireside chat at the Baird 2025 Global Consumer, Technology & Services Conference in New York, NY [2] - On June 5, 2025, CFO Oliver Gloe and Joshua Rickaby will present at William Blair's 45th Annual Growth Stock Conference in Chicago, IL [2] - Interested parties can access live webcasts and archived presentations through the company's investor relations website [2]

Group 1 - Latham Group, Inc. is the largest designer, manufacturer, and marketer of in-ground residential swimming pools in North America, Australia, and New Zealand [1] - The company has approximately 1,850 employees across around 30 locations [1] - Management will attend several upcoming investor conferences, including a virtual event on May 15, 2025, and an in-person event on May 28, 2025 [2] Group 2 - The Chief Financial Officer and other executives will host investor meetings at the Wolfe Research May Small Group/1x1 Conference and Craig-Hallum's 22nd Annual Institutional Investor Conference [2] - The in-person conference will take place at the Depot Renaissance Minneapolis Hotel in Minneapolis, MN [2]