Latham (SWIM) - 2025 Q1 - Quarterly Results

Financial & Operational Highlights 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] - The company's "Sand State" expansion strategy, targeting Florida, Texas, Arizona, and California, is progressing as planned with active marketing and community engagement[3] - Full-year 2025 guidance is maintained, with midpoints projecting 8% sales growth and 19% growth in Adjusted EBITDA[4] First Quarter 2025 Financial Results 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 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 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 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] - 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] - 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] Appendix: Financial Statements 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 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 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 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 This section reconciles non-GAAP financial measures, including Adjusted EBITDA from net loss and Net Debt Leverage Ratio Adjusted EBITDA Reconciliation 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 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 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] - 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][24][28] - 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] - 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][20]