Q1 2025 Earnings Presentation May 6, 2025 Disclaimer Forward-looking Statements Certain statements in this presentation constitute forward-looking statements under federal securities laws. These forward-looking statements reflect our views with respect to future events and financial performance as of the date of this presentation or otherwise specified herein. Actual events and results may differ materially from those contemplated by such forward-looking statements due to risks and other factors that are se ...

[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]

LATHAM, N.Y., April 08, 2025 (GLOBE NEWSWIRE) -- Latham Group, Inc. (NASDAQ:SWIM), the largest designer, manufacturer, and marketer of in-ground residential swimming pools in North America, Australia, and New Zealand, today announced that it will release financial results for the first quarter 2025 on Tuesday, May 6, 2025, after the close of the U.S. market. The Company will hold a conference call to discuss the results that same day at 4:30 PM Eastern Time. We encourage participants to pre-register for the ...

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].

Financial Data and Key Metrics Changes - Net sales for Q4 2024 were $87 million, down 4% from $91 million in Q4 2023, reflecting lower volumes due to industry softness [22] - Full year net sales were $509 million, down 10% from $566 million in the prior year, primarily due to lower sales volume [26] - Adjusted EBITDA for Q4 was $4 million, down 63% from $10 million in the prior period, with an adjusted EBITDA margin of 4%, a decline of 670 basis points year over year [25] - Full year adjusted EBITDA was $80 million, compared to $88 million in the prior year, with an adjusted EBITDA margin of 15.8%, up 30 basis points from 15.5% in 2023 [29] Business Line Data and Key Metrics Changes - In-ground pool sales for Q4 were $44 million, down 5% from Q4 2023, while cover sales were $31 million, down 2% [22] - Full year in-ground pool sales were $259 million, down 13% year over year, but above the estimated 15% decline in in-ground pool starts in the US [26] - Liner sales for the full year were $180 million, down 8%, and cover sales were $131 million, down 7% [27] Market Data and Key Metrics Changes - Fiberglass pools represented 24% of US pool starts in 2024, up from 23% in 2023, indicating increased market penetration [7] - Approximately 17% of Latham Group's total fiberglass pool sales in 2024 were in the sand states, which account for about two-thirds of US pool starts [12] Company Strategy and Development Direction - The company is focused on expanding market share in the sand states (Florida, Texas, Arizona, California) and increasing fiberglass pool penetration [11] - Key priorities include expanding the dealer base, targeting master-planned communities, aligning product offerings with market demand, and addressing marketing campaigns specifically to consumers and builders in those markets [13] - The company plans to launch new fiberglass pool models tailored to the preferences of consumers in the sand states [13] Management's Comments on Operating Environment and Future Outlook - Management expressed cautious optimism about the operating environment, noting that while industry conditions are challenging, they expect to outperform the market in 2025 [20] - The company anticipates that new US pool starts in 2025 will be similar to 2024 levels, but they are prepared to ramp up quickly if market demand increases [19] - Management highlighted the importance of strategic investments in growth initiatives, particularly in fiberglass pools and automatic safety covers [11] Other Important Information - The company ended 2024 with a strong financial position, including a cash position of $56 million and total debt of $282 million [30] - Capital expenditures for 2024 were $20 million, with projections for 2025 to be in the range of $27 million to $33 million [36] Q&A Session Summary Question: Breakdown of the 8% sales growth guidance - Management indicated that the 8% sales growth is expected to come from approximately 3% from the full-year run rate effect of acquisitions and about 5% from organic growth [43][44] Question: Feedback from dealers in the sand states - Management reported positive feedback from dealers, with many indicating that their backlogs are flat or up compared to the previous year, and noted a 40% increase in leads from the Goosa campaign in Texas [48][50] Question: Exposure to tariffs and impact on business - Management stated that the tariff impact is limited, with around $15 million in material buys from affected countries, and emphasized their diversified supplier base to mitigate risks [59][60] Question: Effectiveness of the sand state strategy - Management acknowledged that fiberglass penetration in the sand states is significantly below the national average, presenting a substantial growth opportunity [75] Question: EBITDA margin guidance and tariff implications - Management confirmed that the guidance includes considerations for tariffs, with a focus on maintaining gross margin performance through operational efficiencies [121][130]