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 [18] - Gross margin increased by 190 basis points to approximately 30% compared to 28% in the prior year, driven by lean manufacturing and value engineering initiatives [19][20] - SG&A expenses rose to $31 million, up from $26 million in Q1 2024, primarily due to strategic investments in sales and marketing [20] - Net loss narrowed to $6 million or $0.05 per diluted share from a net loss of $8 million or $0.07 per diluted share in the prior year [20] Business Line Data and Key Metrics Changes - Inground pool sales were $58 million, down 4% from Q1 2024, impacted by soft industry conditions and adverse weather [19] - Cover sales increased by 18% to $32 million, benefiting from organic growth and acquisitions [19] - Liner sales decreased by 8% to $22 million compared to the first quarter of 2024 [19] Market Data and Key Metrics Changes - Fiberglass pools are expected to gain an additional 1% market share in the inground pool sector in 2025 due to cost advantages and easier installation compared to concrete pools [6][7] - 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 [8] 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][16] Management's Comments on Operating Environment and Future Outlook - Management expressed cautious optimism about the market, noting a slight improvement in industry conditions compared to the previous year, but still expecting trough market conditions to persist in 2025 [5][23] - The company maintains its revenue growth expectation of 8% for 2025, with approximately 5% organic growth and 3% from acquisitions [23] - Management highlighted the importance of brand visibility and engagement, noting that Latham is the most searched brand among major fiberglass manufacturers [12] Other Important Information - The company announced the resignation of its Chief Commercial Officer, but emphasized the strength of its commercial team [17] - Capital expenditures are expected to range between $27 million and $33 million in 2025, reflecting investments in new production modes and facility expansions [22] 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 sales grow, with a focus on maintaining flat SG&A expenses in the latter part of the year [27][28] Question: Reaction to new molds and marketing efforts in Sand States - Management reported positive trends in sales and strong progress in aligning with builders in the Sand States, with expectations for continued improvement [30][31] 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 significant slowdown in consumer interest or buying decisions [39][41] Question: Impact of tariffs on costs and pricing strategy - Management quantified the tariff headwind at approximately 350 to 400 basis points, with pricing strategies aimed at mitigating the remaining impact [43][44] Question: Strength of auto cover sales and organic growth - The auto cover business outperformed primarily due to acquisitions, but also saw positive organic growth, with a significant portion of sales coming from existing pools [77] Question: Demand environment and potential adjustments to marketing expenses - Management plans to maintain marketing investments despite potential changes in discretionary spending, emphasizing a long-term growth strategy [80][81]

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]