Core Insights - Latham Group, Inc. reported strong financial results for the fourth quarter and full year 2025, with a 15% increase in revenues in Q4 and a 7% increase for the full year, demonstrating effective execution by the team [1][20][24]. Financial Performance - Fourth quarter net sales reached $100 million, up from $87 million in Q4 2024, with organic growth of 14% [20]. - Full year net sales totaled $546 million, compared to $509 million in the previous year, reflecting both organic and acquisition-related growth [24]. - Adjusted EBITDA for Q4 was $10 million, significantly up from $3.6 million in the prior year, with an adjusted EBITDA margin of 11% [22][23]. - Full year adjusted EBITDA was $100 million, an increase of $20 million from the previous year, with an adjusted EBITDA margin of 18.3% [28]. Product Line Performance - In-ground pool sales for Q4 were $50 million, up 15% year-over-year, while full year in-ground pool sales were $262 million, a 1% increase [20][25]. - Auto cover sales grew by 22% in 2025, reaching $161 million, driven by increased consumer adoption and strategic partnerships [8][24]. - Liner sales increased by 4% to $123 million, supported by industry-leading lead times and the rollout of a proprietary AI-powered measuring tool [10][26]. Market Position and Strategy - Latham Group, Inc. gained an estimated 1% market share in 2025, accounting for approximately 24% of U.S. pool starts, reflecting the growing adoption of fiberglass pools [6][25]. - The company is focusing on expanding its presence in the Sand States, particularly Florida, where it achieved double-digit sales growth [12][14]. - The acquisition of Freedom Pools is expected to enhance market position in Australia and New Zealand, contributing approximately $20 million in net sales and $4 million in adjusted EBITDA annually [17][31]. Operational Efficiency - Gross margin expanded by 340 basis points to 28% in Q4, primarily due to volume leverage and lean manufacturing initiatives [21]. - SG&A expenses increased to $31 million in Q4, reflecting investments in sales and marketing to drive growth in fiberglass pools and auto covers [22][27]. Future Outlook - For 2026, Latham Group, Inc. anticipates net sales between $580 million and $610 million, representing a year-on-year growth of approximately 9% at the midpoint [33]. - The company plans to increase investment in branding and marketing to enhance consumer awareness of fiberglass pools and auto covers [15][32]. - Continued focus on strategic priorities includes driving awareness and adoption of fiberglass pools, particularly in the Sand States, and pursuing selective acquisitions for growth [16][32].

Financial Performance - Latham Group reported net sales of $172.6 million for Q2 2025, an increase of $12.5 million or 7.8% from $160.1 million in Q2 2024, driven by both organic and acquisition-related growth [6][7] - Gross profit for Q2 2025 was $64.0 million, up 20.6% from $53.0 million in the prior year, with a gross margin expansion of 400 basis points to 37.1% [9][10] - Net income for Q2 2025 was $16.0 million, or $0.13 per diluted share, compared to $13.3 million, or $0.11 per diluted share in Q2 2024 [11][12] Product Line Performance - In-ground swimming pools generated $78.6 million in sales for Q2 2025, a slight decrease from $80.9 million in Q2 2024, while covers sales increased by 46% to $37.2 million [9][10] - Liner sales grew by 6% year-over-year, contributing to the overall growth in Q2 [4][9] - Fiberglass pools are projected to represent approximately 75% of the company's full-year 2025 in-ground pool sales, supported by targeted marketing initiatives [3][4] Strategic Initiatives - The company is focusing on increasing awareness and adoption of fiberglass pools and autocovers, particularly in the Sand State markets, which has led to a significant increase in dealer additions [2][3] - Marketing campaigns have successfully driven substantial increases in website traffic and consumer engagement in key target locations [3][4] - The acquisition of Coverstar businesses has contributed to the growth in autocover sales and overall market presence [4][5] Margin and Expense Management - Adjusted EBITDA for Q2 2025 was $39.9 million, reflecting a 15.7% increase from $34.5 million in Q2 2024, with an adjusted EBITDA margin of 23.1% [12][16] - Selling, general, and administrative expenses rose to $31.9 million, primarily due to increased marketing and personnel investments related to the Sand State strategy [10][15] Outlook and Guidance - The company reaffirms its full-year guidance of 8% net sales growth and 19% adjusted EBITDA growth at the midpoints, driven by category share gains in fiberglass pools, autocovers, and liners [19][22] - Latham anticipates approximately 60,000 new U.S. pool starts in 2025, aligning with original estimates despite challenging market conditions [19][20]

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]