Q4 2025 Earnings Call March 3, 2026 Disclaimer Forward-looking Statements 2 Latham: A Compelling Long-term Growth Story Industry leader benefiting from increased adoption of Fiberglass Pools and Autocovers 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 resul ...

Core Insights - Latham Group, Inc. has acquired Freedom Pools, a fiberglass pool manufacturer and installer in Australia and New Zealand, completing the transaction on February 26, 2026 [1][2] Financial Impact - The acquisition is expected to add approximately $20 million in net sales and around $4 million in adjusted EBITDA annually, before considering acquisition synergies [2] - The purchase price for Freedom Pools was approximately $17 million, fully funded with cash on hand [2] Strategic Expansion - This acquisition enhances Latham's presence in Australia and New Zealand, particularly in Western Australia, including Perth, which is noted as the fastest-growing city in the country [3] - Freedom Pools has over 50 years of history and is recognized as one of Australia's leading fiberglass pool builders, with operations in multiple cities [4] - The acquisition complements Latham's existing presence with Narellan Pools, acquired in 2019, and supports a direct-to-consumer strategy through Freedom's display centers [5] Company Background - Latham Group, Inc. is the largest designer, manufacturer, and marketer of in-ground residential swimming pools in North America, Australia, and New Zealand, employing approximately 1,850 people across around 30 locations [7]

Core Insights - Latham Group, Inc. celebrates its 70th anniversary and plans to introduce new products and a partnership at the 2026 Pool & Spa Show, focusing on innovations in plunge pools, spas, vinyl pool liners, and autocovers [1][2] Product Innovations - The company will showcase a range of fiberglass products, which are increasingly popular among homeowners for their strength, style, and low maintenance [4][5] - Demand for plunge pools has surged, with 40% of residential plunge pool builders reporting increased demand since 2022. Latham is expanding its plunge pool offerings with two new Milan models measuring 8' x 14' and 10' x 20' [6][7] - Latham's Ultra-Seam® technology will be expanded to pool walls, providing a virtually seamless design and stronger vinyl liners. Over one million liners have been produced using this technology [8][9] - New vinyl pool liner patterns have been introduced, including various hues and designs tailored for design-conscious homeowners [9] - The company is launching two new compact vinyl liner pool spas, designed for limited outdoor spaces, featuring gel-coat fiberglass construction for added durability [10] Safety and Efficiency Enhancements - Latham is addressing higher homeowner expectations for safety and efficiency with new solutions, including a next-generation touch pad controller for autocovers that supports multiple pin codes [11][18] Partnership and Community Engagement - Latham has partnered with USA Artistic Swimming to promote the sport and enhance community engagement, leveraging its national presence to raise awareness and share athlete stories [2][3]

Core Insights - Latham Group, Inc. has become an official sponsor of USA Artistic Swimming, aligning with the organization's commitment to excellence and the love of swimming [1][4] - The partnership aims to inspire families to enjoy swimming and promote water safety through storytelling and advocacy [4][5] 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 [6] - The company operates across 24 locations, offering a wide range of pool products, including fiberglass and vinyl liner pools, as well as automatic safety covers [6] Partnership Details - The sponsorship will leverage Latham's national presence to raise awareness for artistic swimming and showcase the features of Latham pools through the Olympic team's performances [4] - Latham plans to highlight the stories of USA Artistic Swimming athletes on its website and social media, emphasizing the importance of early water confidence [4][5] Industry Context - USA Artistic Swimming serves as the national governing body for the sport in the U.S., focusing on performance, innovation, and inclusion [7] - The partnership reflects a shared vision between Latham and USA Artistic Swimming to promote the benefits of swimming and artistic expression through the sport [2][5]

Financial Data and Key Metrics Changes - Net sales increased by 7.6% year-on-year, reaching $162 million compared to $151 million in the prior year [13] - Adjusted EBITDA rose by $8.5 million, or 28.5%, totaling $38.3 million, with an adjusted EBITDA margin of 23.7%, up 390 basis points from the previous year [18] - Gross margin expanded to 35.4%, an increase of 300 basis points year-on-year [17] Business Line Data and Key Metrics Changes - In-ground pool sales increased modestly by just under 1% year-on-year, driven by fiberglass pool sales, which are expected to account for approximately 75% of full-year 2025 in-ground pool sales [6][15] - Pool covers sales grew by 15%, with significant organic growth in auto covers [9][16] - Liner sales increased by 13%, supported by the successful rollout of the Measure by Latham tool [10][16] Market Data and Key Metrics Changes - The U.S. in-ground pool market is expected to remain flat to slightly down compared to 2024 levels, yet Latham outperformed this market [4][21] - Florida sales increased at a high single-digit rate, with Latham gaining traction in master plan communities [11][12] Company Strategy and Development Direction - The company is focused on increasing awareness and adoption of fiberglass pools and auto covers, as well as expanding sales of in-ground pool liners [14] - Strategic partnerships with custom home builders in Florida are being established to enhance market presence [12][34] - Latham aims to leverage its proprietary measuring tool to gain market share in the liner product line and winter safety cover market [10][11] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in continued growth despite a challenging industry environment, projecting 7% sales growth and 19% adjusted EBITDA growth for 2025 [20][21] - The company anticipates that fiberglass pool and auto cover adoption will enable it to outperform the in-ground pool market [21] Other Important Information - The company ended the third quarter with a strong financial position, maintaining cash of $71 million and a net debt leverage ratio of 2.3 [19] - Capital expenditures for the third quarter were $5.8 million, with a revised estimate for full-year CapEx set at $22-$24 million [20] Q&A Session Summary Question: What have you seen in terms of upstream metrics from leads and consumer confidence? - Management noted strong lead generation throughout the peak pool building season, with significant year-over-year increases, although consumer confidence remains affected by tariff and interest rate uncertainties [25][26] Question: Can you provide context on the liners' performance and market share gains? - The performance is attributed to a combination of share gains in the replacement market and challenges in the lower end of the new construction market [27][28] Question: How did demand progress geographically throughout the quarter? - Demand was consistent across most regions, with strong performance in Florida, while Texas and California remained challenging markets [31][32] Question: What is the outlook for pricing and tariffs? - Price increases implemented in June have effectively mitigated tariff impacts, with net tariff exposure remaining stable at approximately $10 million [42][43] Question: Is there potential for accelerated market share gains in fiberglass pools? - Management believes that while a 1% market share gain per year is a reasonable expectation, increased traction in the Sand States could lead to accelerated growth [46][48] Question: What is the strategy for SG&A spending moving forward? - SG&A spending is expected to remain stable, with continued investments in sales and marketing initiatives, particularly in the Sand States [49][50]

Summary of Latham's Conference Call Company Overview - Latham is a leading producer of inground residential pools, specializing in fiberglass pools, vinyl liners, and pool covers [2][4] - The company is the largest manufacturer of inground swimming pools in North America, Australia, and New Zealand [4] Industry Insights - Fiberglass pools are gaining market share over concrete pools due to lower costs and faster installation [2][12] - The U.S. market for inground pools is currently at 62,000 pools sold in 2024, with expectations of a flat market in 2025 [15][42] - Fiberglass pools represent 23% of all pools installed in the U.S., a number that has increased from 16% in 2019 [14][48] - The company holds a 50% market share in the fiberglass category and is the market leader in other categories with shares of 30-40% [6][7] Growth Strategies - Focus on expanding market share in the "sand states" (Florida, Texas, Arizona, California) where fiberglass pools are underrepresented [4][8] - Strategic priorities include increasing customer awareness, expanding the dealer base, and tailoring products to regional market needs [9][24][30] - The company aims to increase fiberglass pool adoption in the sand states, leveraging demographic similarities to Australia, where fiberglass pools hold a 70% market share [23][24] Financial Performance - The company has implemented restructuring projects to improve operating efficiencies and reduce costs [5][41] - Guidance for 2025 includes an 8% increase in net sales, driven by organic growth and contributions from recent acquisitions [42][43] - EBITDA is projected to increase by 19% compared to 2024, with a target of $95 million in EBITDA for 2025 [44] Market Dynamics - The company has seen a consistent annual conversion rate of 100 basis points towards fiberglass pools [48] - Tariffs are expected to create a $20 million headwind in 2025, but the company has mitigated some of this impact through supply chain strategies and price increases [50][51] - There are no significant cancellations or delays reported, as current installations are based on long-term decisions made by cash buyers [52] Key Takeaways - Latham is well-positioned for growth in the fiberglass pool market, particularly in underrepresented regions - The company is actively managing costs while pursuing strategic growth initiatives - Financial projections indicate a strong outlook for the coming years, despite market challenges and external pressures like tariffs [41][44]

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 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]

Financial Performance - Q4 2024 net sales decreased to $87 million from $91 million in Q4 2023[18] - Q4 2024 Adjusted EBITDA decreased to $4 million from $10 million in Q4 2023[18] - Full year 2024 net sales decreased to $509 million from $566 million in 2023[22] - Full year 2024 Adjusted EBITDA decreased to $80 million from $88 million in 2023[22] - The company achieved $4 million in savings from restructuring programs and $9 million from cost reduction actions in 2024[26] Strategic Initiatives & Acquisitions - Coverstar Central acquisition, closed in August 2024, is expected to increase annualized net sales by $20 million and expand annualized Adjusted EBITDA margin by 140 bps[34] - Coverstar New York and Coverstar Tennessee acquisitions are expected to increase annualized net sales by a combined $5 million and Adjusted EBITDA by a combined $1 million[34] - The company is targeting Master Planned Communities, where approximately 30,000 new homes were constructed in 2023, with 75% of the largest communities located in Florida and Texas[10] 2025 Outlook - The company forecasts flat new U S pool starts in 2025 compared to 2024[16, 37] - The company projects net sales between $535 million and $565 million and Adjusted EBITDA between $90 million and $100 million for full year 2025[35] - Capital expenditures are expected to be between $27 million and $33 million in 2025[35]