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]