Latham (SWIM)2023-05-13 20:42Financial Data and Key Metrics Changes - The company reported net sales of 54 million or 28% compared to Q1 2022, which had set a high record due to elevated backlogs and increased production levels [65][88] - Adjusted EBITDA for Q1 was 37 million or 77% from Q1 2022, with an adjusted EBITDA margin of 8%, down from 25% in the prior year [13][66] - Gross profit decreased by 79 million, driven by wholesaler destocking and lower fiberglass pool sales compared to the strong Q1 2022 [102] - Sales of liners fell 44% to 33 million, indicating strength in the automatic safety covers market [70] Market Data and Key Metrics Changes - The U.S. fiberglass penetration expanded to 21% in 2022, gaining 3 points of share despite a 16% decline in overall U.S. in-ground pool installations [74][84] - The company noted that much of the softness in overall U.S. pool starts was in the concrete pool market, particularly in regions where they are underpenetrated [87] Company Strategy and Development Direction - The company is focused on recruiting new dealers and enhancing lead generation efforts, which have shown momentum in website activity and lead generation tools [5][25] - The company aims to drive material conversion from concrete to fiberglass pools, supported by lead generation and digital tools [73][84] - The launch of "Measure by Latham," an AI-powered digital measuring tool, is expected to modernize the measurement experience for dealers and drive growth in winter safety covers and in-ground liners [86][101] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the long-term fundamentals and growth opportunities despite macroeconomic challenges, including higher interest rates and inflation [67][74] - The company anticipates a normalization of packaged pool inventory in the wholesale distribution channel to remain a headwind through the first half of 2023 [72] - Management reaffirmed the fiscal year 2023 outlook for net sales of 615 million and adjusted EBITDA of 110 million [107] Other Important Information - The company has implemented cost reduction initiatives expected to yield annualized savings of about 10 million, up from $7 million in the same period last year, primarily for investments in manufacturing facilities [72] Q&A Session All Questions and Answers Question: Can you talk about where you outperformed versus your expectations coming into the year? - Management noted that they outperformed slightly in all three product lines, reflecting stronger demand than expected, but it is still early in the season to consider raising guidance [95] Question: What are you hearing from your dealers in terms of backlogs and leads turning into actual projects? - Management indicated that dealers still have good backlogs through the first half of the year and are focusing on driving lead generation to maintain activity in the second half of 2023 [104]