Financial Data and Key Metrics Changes - Fourth quarter revenues increased by 15%, reaching $100 million compared to $87 million in Q4 2024, driven by strong Fiberglass pool sales and increased demand for auto covers [4][16] - Full year 2025 net sales were $546 million, up 7% from $509 million in 2024, despite a decline in the U.S. in-ground pool market [19][20] - Adjusted EBITDA for the fourth quarter was $10 million, up from $3.6 million in the prior year, with an Adjusted EBITDA margin of 11%, a 630 basis point increase year-over-year [18][19] - Full year Adjusted EBITDA was $100 million, up $20 million from $80 million in 2024, with an Adjusted EBITDA margin of 18.3%, a 250 basis point increase [23][24] Business Line Data and Key Metrics Changes - In-ground pool sales for Q4 were $50 million, up 15% year-over-year, with full year sales at $262 million, a 1% increase [17][20] - Auto cover sales grew by 22% in 2025, reaching $161 million, driven by organic growth and acquisitions [20][21] - Liner sales increased by 4% to $123 million, supported by industry-leading lead times and the adoption of the Measure Pro tool [21][22] Market Data and Key Metrics Changes - Fiberglass pools accounted for 76.5% of in-ground pool sales in 2025, with a year-on-year growth of approximately 2.5% [5][19] - The market penetration of Fiberglass pools in the U.S. increased to approximately 24% in 2025, up from 16% in 2019 [6][20] - Sales volumes from the Sand States remained steady at approximately 17%, with significant growth in Florida offsetting declines in Texas [11][20] Company Strategy and Development Direction - The company plans to increase investment in branding and marketing to enhance consumer awareness and drive adoption of Fiberglass pools and auto covers [14][30] - Latham aims to accelerate organic growth while considering selective acquisitions to expand geographic reach and revenue synergies [14][26] - The recent acquisition of Freedom Pools is expected to significantly enhance market position in Australia and New Zealand, providing immediate earnings accretion [15][25] Management's Comments on Operating Environment and Future Outlook - Management anticipates a flat U.S. in-ground pool market in 2026, but believes Latham is well-positioned to outperform due to its leadership in Fiberglass pools and auto covers [26][29] - The company recognizes the need for increased consumer education regarding Fiberglass pools and aims to improve the purchasing process for homeowners [94][96] - Management is optimistic about growth opportunities in the Sand States, particularly Florida, and plans to leverage past experiences to enhance market penetration [12][30] Other Important Information - The company ended 2025 with a strong cash position of $71 million and total debt of $280 million, maintaining a net debt leverage ratio of 2.1 [24][25] - Capital expenditures for 2025 were $25 million, with plans for increased spending in 2026 to support growth initiatives [25][27] Q&A Session Summary Question: What excites you about the opportunity in the Sand States? - Management expressed enthusiasm about the potential for growth in the Sand States and the importance of focusing on qualified dealers to drive market development [35][36] Question: Can you provide guidance on 2026 segment growth? - The majority of growth is expected to come from Fiberglass pools, with all product categories projected to grow [40] Question: How do early demand indicators look for 2026? - Management noted strong demand indicators but acknowledged challenges such as interest rates and consumer confidence affecting the market [47][48] Question: What is the outlook for pricing in 2026? - Pricing is expected to remain stable, with a potential 2% increase from previous price adjustments and normal seasonal increases [62][63] Question: How will the acquisition of manufacturing facilities impact the P&L? - The acquisition will replace lease expenses and is expected to contribute positively to EBITDA [99]

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% from 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 Q1 2024 [19] 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 eco-friendly attributes [6][7] - Labor scarcity is seen as a tailwind for fiberglass pools due to lower labor intensity compared to concrete pools [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][15] 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] Other Important Information - The company has implemented targeted price increases to mitigate the impact of tariffs on raw materials, which represent about 15% to 20% of the materials used in manufacturing [22] - The company is confident in its ability to offset raw material cost increases through strategic pre-purchasing and operational adjustments [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 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 in aligning with builders in the Sand States, with expectations for continued improvement [29][30] Question: Risks and opportunities in fiberglass pool demand - Management noted that while fiberglass pools can be installed quickly, the buying decision is a longer process, and they have not seen any slowdown in trends [36][39] Question: Impact of tariffs on pricing and margins - Management quantified the tariff headwind at approximately 350 to 400 basis points, with pricing increases aimed at mitigating the remaining impact [41][42] Question: Strength in auto covers and organic growth - The auto cover business outperformed primarily due to acquisitions, but there was also a positive organic impact [76] Question: Demand environment and potential marketing expense adjustments - Management plans to maintain marketing expenses as part of a long-term strategy, despite potential fluctuations in discretionary spending [78][81]